Carl Richards is a financial planner and best-selling author. In his book The One Page Financial Plan he tells the story of talking to his friend, Brad, who was saving for a long-term goal that seemed almost unreachable. Brad was married and had a child. It was all he could do to meet his current…
It’s Hard to Save for a Stranger In an effort to understand how our brains work scientists have done a lot of research using brain scans. They have discovered that the activity in our brains differs depending on what we are thinking about. These studies have shown that our brains are very good at distinguishing…
The $50,000 Dollar Tennis Game Larry Kotlikoff is a professor of economics at Boston University, expert on Social Security, and weekend-warrior tennis player. Several years ago he was playing tennis with Paul Solman, the business and economics correspondent for the PBS News Hour. I don’t know who won the tennis game but it was definitely…
In the past I have written about “Save More Tomorrow,”, an innovative plan that uses the principles of behavioral finance to help people increase their retirement savings over time. Here is a link to my prior post, titled “Use the ‘Wimpy’ Savings Plan to Increase Your Savings Rate“. I recently ran across an interesting TED talk by Shlomo Benartzti,…
One of the most important financial decisions you will make is how to invest the money you are putting in your 401(k). Target date funds are the default option for most retirement plans, but in a prior post I showed that target date funds aren’t the best option for most people. If target date funds…
William of Occam was a Franciscan friar, theologian, and philosopher who lived in England from 1287 to 1347. He is known to us today mostly from the problem solving principle he formulated known as Occam’s razor. Although he never said it this clearly Occam’s razor can be summarized as follows: The best solution to a problem…
“The great paradox of this remarkable age is that the more complex the world around us becomes, the more simplicity we must seek in order to realize our financial goals. Never underrate either the majesty of simplicity or its proven effectiveness as a long-term strategy for productive investing. Simplicity, indeed, is the master key to…
I grew up before computers, video games, the internet, i-Pods, i-Tunes, i-Phones, i-Pads, Facebook, and Twitter. Back then people had to entertain themselves and one way this was done was through sing-a-longs. When I was a kid many community and church gatherings had sing-a-longs and one song that was often sung was a silly old…
Some of you are probably familiar with the famous Marshmallow Test. In the 1960s psychologist Walter Mischel designed a simple experiment to test the self-control of preschoolers. Mischel would let the students pick from a variety of treats. He would then tell them they could eat the treat immediately, or they could wait until he…
Gazelle Intensity Popular debt elimination evangelist Dave Ramsey teaches that, after setting aside $1,000 for emergencies, your only financial priority should be paying off all debt except your home mortgage. Everything else, including saving for retirement, should be put on hold until your debts are paid. Ramsey uses the term “gazelle intensity” to describe the…
