I remember reading research many years ago explaining that it’s easier for agencies to raise tolls once drivers convert to EZ-Pass or another electronic tolling method. Why? Because people don’t notice the increases. Blissfully driving through toll booths without stopping, drivers feel no financial pain as they do. But also, most people would rather pay a little bit extra for an ezpassny and be able to drive continuously without stopping and starting. Those extra couple of dollars can save so much time. When the money comes later — maybe a month later — so the cost has no visceral, emotional impact. And neither to toll rate increases.
Just like credit cards!
Any time you spend money without feeling your hard-earned cash slipping through your fingers, you tend to spend more. That’s just human nature. The more detached you are from your spending, the more you will spend. It’s also why running a cash-only experiment on your budget once in a while is a great idea, sort of like the money equivalent of a juice cleanse.
One of my favorite ways to combat this problem is the “5 questions” technique. I just described one version of this for my friends over at Grow / Acorns. I think many people are dangerously disconnected from — not just their spending — but their entire financial picture, and a lot of trouble grows from that. How do you plug back into your finances? Give yourself a quiz. Where is your debt? What did you spend on beer last month? How much longer until your debts are paid off? There’s 100s of questions you could ask, of course, but here’s the point: You should know these things by heart. If you don’t, you can’t make good reflexive decisions about money. Should you splurge on that new TV or those great shoes? Not if you overdid the holiday gifts last month. But if you’ve received a nice bonus lately, sure.
Of course, some questions are better than others, and I’ve developed five that everyone should be able to answer at all times. Here’s a taste of my story on Grow story, but you can read it over there.
If you’d like to try Acorns, use my referral code by clicking on this link and you’ll get a $5 bonus deposited into your account. BIG DISCLOSURE: I will get $5 also if you use my referral code.
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If you put $100 in your wallet on Monday and only spend cash, it’s easy to calculate how much you have left on Friday. But, of course, most of us don’t do that. Instead, we buy by swiping, clicking, inserting, waving; and, in some cases, doing nothing at all, thanks to auto-debits. We receive income just as magically, direct deposited into our accounts.
All this movement is convenient; but it’s risky, too, because it means you probably have no clue how much you spend, save or have in the bank. That makes it hard to get—and keep—a good grasp on your financial life.
How much do you really know about your money situation? The five questions below are designed to help you find out. You’ll be tempted, but don’t look up the answers. Knowing where to find the right response isn’t enough. Getting to know these numbers well enough to recite them regularly is the best way to make sure they’re what you want them to be.
Finish reading at Grow.Acorns.Com
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