I’m all about a good psychological hack–especially when it pertains to managing my finances.
That’s why I was thrilled when Emily Guy Birken offered me a free copy of her book–End Financial Stress Now—to read and reflect on. This tome was heavy on the scientific aspect of our financial psychology. It cites a ton of different studies which reveal our biases and focus on behavioral microeconomics.
Mind Hacks to End Financial Stress Now
If you’re like most Americans and can’t even when it comes to thinking about your money, this book is an incredibly helpful guide for finding some ways to convince your brain to do the right thing–even if it doesn’t want to.
Emily shares a myriad of these hacks of these in the book, but I wanted to pass along a few that really struck me.
Make Smaller Purchases More Frequently
Last year I learned that taking smaller, but more frequent vacations actually gives us more satisfaction than taking a big luxe one.
End Financial Stress Now taught me that the same thing applies to our purchases. We’re way more likely to be happy if we use our money to buy ourselves small things more frequently than we are if we use that same money to save and make one big purchase.
This might sound like an excuse to go on shopping sprees more frequently, but that’s really not the right way to approach it. I loved the example Emily used of having a standing movie date with your bestie every week as opposed to purchasing that super sexy (and expensive) car.
I love this trick because stuff loses its luster, but memories only get better with time. Spending on the latter is a smart way to go about pursuing happiness.
Emily breaks down four common money scripts in her book:
- Money Avoidance
- Money Worship
- Money Status
- Money Vigilance
Citing the work of Dr. Bradley Klontz, she delves into these scripts–or stories–we’ve told ourselves about money since our early informative years. She examines how they sometimes overlap and highlights different ways you can combat the negative effects of each one.
My dominant script is money vigilance.
Another crazy interesting section of the book talked about how we often get tripped up by small barriers lodged within large tasks. For example, I have a myRA. They stopped taking contributions in December. I’ve been getting a lot of notifications from them that I should do something about the money sitting in the account.
I really should. But I haven’t.
I don’t currently have a Roth IRA, and to roll that money over I’m going to have to open one. It’s really important to me to find socially responsible investment options since the money won’t just be in government bonds anymore. And I’d like to use a low-fee robo advisor to do that.
That’s a lot of research and effort, but because of my money vigilance script, I feel like all of it is necessary.
If it’s so necessary, though, why haven’t I done it?
Because I feel like it’s one big, messy, complicated task. And I’m a pretty busy person.
But I took Emily’s advice and broke the seemingly huge task down:
- Research best SRI robo advisors, taking expense ratios into account.
- Don’t get bogged down by all the research–do it for one hour and then stop.
- Open a Roth IRA with my intended robo advisor.
- Transfer funds.
This weekend I got through steps one and two, which is much more than I’ve gotten done in the months since I learned they were closing down the myRA program. The small obstacle of doing preliminary research was holding me back.
I decided on WealthSimple. While their expense ratios aren’t the lowest, they’re not insanely high. And they have the most diverse SRI options I could find in a robo advisor–at least one that lets you open up a Roth. Plus, I get one year of portfolio management for free.
MyRAs functioned identically to Roth IRAs for tax purposes, so I have to see if I need to open a Roth or simply transfer the myRA. I’ll be making a call on Monday to figure out what I should do.
Later this week, I’ll actually do it.
By breaking the task down, I reduced the stress of each small barrier and was able to keep my vigilant financial habits in check so they did not become destructive via overwhelm and procrastination.
Definitely. This is a super interesting read for those who like psychological hacks. I’ve shared three with you today, but there are so, so many more. If you want to get out of your own way and fix your money, pick up a copy today.
If you had to make an off-the-cuff guess, what would your money script be?