Posts Tagged "spending"

Journal to Spotlight Financial Behavior

JMR logo

The Journal of Marketing Research (JMR) will devote a special issue to interdisciplinary research on the hot topic of financial decision–making and behavior.

The issue is a smorgasbord of 15 articles on behavioral, marketing, economic, and psychological research on various financial activities, from borrowing money to establishing trust in financial transactions.

The November issue’s guest editor-in-chief, John G. Lynch, a psychologist who “wandered into marketing and consumer decision-making,” said the interdisciplinary approach advances everyone’s understanding of complex financial decisions.

“A given field understands a part of the answer. But we’re missing the larger whole,” he said. The special issue “would bring people together to read each other’s work and have an effect of causing more cross-fertilization.”

Squared Away plans to cover some JMR articles in a series of blog posts in coming weeks. Here’s a preview: …Learn More

Painless Personal Finance

I keep bumping into Tim Maurer’s videos – he’s an active tweeter – and decided to share the fun. This Baltimore financial planner’s clients include a lot of 30-somethings, so he produced a series of humorous 90-second videos that knock down the barriers to understanding the basics of various personal finance topics.

With many people either returning from or heading out on vacation this week, he suggests in this video how to eliminate the anxiety around spending money on trips.

But a couple of Maurer’s funniest videos include “The Bias of Life Insurance Agents in 90 Seconds or Less” and “How to Spend $1 million at Starbucks in 90 Seconds or Less.” At a time of historically low mortgage interest rates, a new video may be of interest to pre-retirees: “Pay off the Mortgage in 90 Seconds or Less.” Learn More

App Promotes Retirement Saving

The impact of today’s purchasing decisions on how much money you’ll have years from now, in retirement, can be abstract. Putnam Investments’ new iPhone app does the math for you.


This Putnam video uses the example of an HDTV that costs $1,738: save that money instead and earn an additional $44.18 per month in retirement. That’s enough for a dash to the grocery store or an evening at the movies.

Putnam’s senior Web executive, David Nguyen, called it a “smart app,” because it allows users to tailor the assumptions that drive the calculations. For example, the app takes into account the user’s age, and it assumes the money not spent will earn investment income until you’re 65 years old (that targeted retirement age can also be changed). The investment returns mirror the individual returns for each user’s asset allocation.

Phone apps are proliferating, and there are lots of cool new ones for every financial need and age group, including children. Putnam’s app is pretty popular. The Boston mutual fund company said about 1,000 people have downloaded its new PriceCheck&Save application from Apple’s iPhone store since its June 6 release.

Unfortunately, it’s available only to those whose 401(k)s are managed by Putnam, though the company is working on an unrestricted app.

If Putnam doesn’t, someone else surely will.Learn More

There’s an App for That Child!

Susan Beacham’s company has sold nearly one million of its piggy bank with four slots – for spending, saving, donating, and investing. She has now developed an iPhone application based on the iconic pig.

Children who use the clear blue piggy bank like to watch their money clink to the bottom of one of the four separate sections in the pig’s innards. Beacham has developed an entire curriculum around the four choices. The Money Savvy Pig has been adopted as a teaching tool by more than 200 Chicago public schools and by school systems in Seattle, North Dakota, Europe, and elsewhere.

The idea behind the game app, called “Savings Spree,” is the same: to help children “strengthen the muscle of choice and, therefore, their self-regulation and self-control,” said Beacham, chief executive of Money Savvy Generation Inc., a small, mission-driven company employing four people. …

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Income Source or Security Blanket?

Americans have squirreled away some $7.1 trillion in their retirement accounts. But once they actually retire, they don’t seem to know what to do with their money.

The U.S. income retirement system is in the throes of a foundational shift from guaranteed employer pensions to a system that puts most of the burden onto employees to make sure they have enough retirement income. I’ve been hearing recently about the heated debate on how Americans who are retiring are handling their finances under the new system.

Some worry that retirees are using up their personal retirement account (PRA) assets too quickly, while others believe they aren’t using the funds as retirement income, as intended when they were working and saving the money. By not spending it, they may be unnecessarily lowering their standard of living. …
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A lit lightbulb floating in front of a blue sky with a large puffy white cloud.

Finding Motivation to Control Spending

In a May 5 Squared Away blog post, I provided a list of financial planners’ five favorite tools for helping people control their spending. In this post, I’m providing their motivational suggestions.

Here are the five tips, based on my informal survey of planners. Each tip includes the psychological rationale behind it.

Find the “Aha! Moment.”

Some clients respond when they see, in detail, how much they’re spending and what they’re buying. Bonnie A. Hughes, a northern Virginia planner, is a big believer in mild shock therapy. She’s had great success by showing clients how much their income would fall if they were laid off, divorced, or dropped out of the workforce. Or she shows them just how much they’ll need in retirement, and it’s usually a big number.

Reason: The Aha! Moment provides the self-motivation that clients must possess and that planners can’t provide. …Learn More

White sand beach with clear blue water.

Whoopee! The Kids Are Gone

Many parents feel the tension between competing priorities: saving for their children’s college education and saving for their own retirement. Once the kids graduate and move out, the parents rationalize, we’ll really start socking money away.

But do they?

They do not, according to a recent report from Boston College’s Center for Retirement Research, which is affiliated with Squared Away. The report found that parents, suddenly feeling rich after the children leave the nest, indulge by spending 50 percent more on eating out, going to the movies, or buying new clothes.

There are two risks in doing so. …Learn More

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