When it comes to personal-finance hygiene, there are tons of deliberate, conscious decisions to make. We can research the lowest credit-card APRs, contribute regularly to our workplace retirement accounts and so on.
But I’ve found that if I want to make changes to my day-to-day money management, I have to look at the subconscious. Essentially, I have to hack my brain.
For example, I never click “save” when a shopping site asks me to store my payment information for an easier checkout. I force myself to input my credit-card information every single time so that as I type in the numbers, I give my brain an extra second or two to think “Wait. Do I really need another pair of statement earrings?”
I can’t even count the number of times this has saved me from an impulsive purchase.
For myself and other younger adults, this particular point in our financial lives can feel confusing, even overwhelming. The personal-finance playbook our parents and grandparents followed doesn’t feel relevant or actionable. We are also at an age when saving even a little more can have a profound effect 30 years from now, given the magic of compounding. So we should welcome whatever tip or trick can make the tiniest difference.
I’ve been inspired by friends and acquaintances sharing their personal-finance “mind hacks.” One friend says when the online-shopping cravings strike, she gives herself permission to add whatever she wants to her cart—but she has to wait 24 hours before checking out. Almost always, when she revisits it the next day, she realizes she doesn’t need any of the stuff she was so excited about the day before.
Another friend’s workaround for simultaneously curbing spending and upping her investments: Every time she’s tempted to buy something she doesn’t need, she’ll instead move the equivalent amount of money into her investment account.
The behavioral economists and financial planners I spoke with agree that sometimes we need to make things easier on our brains, especially when building good money habits can feel intimidating and elusive to so many. Young people are still in the process of building those muscles, and repetition and consistency are key to baking these habits into our busy lives.
“The practical side of finance is the easier part,” says Lissa Lumutenga , a Los Angeles-based certified financial planner and financial educator. “It’s the behavioral part that’s harder. There are different things we can do and should do to untrain ourselves from those bad habits and those things we shouldn’t be doing and training ourselves with the new stuff, the better stuff for us.”
A little friction helps
The secret to many of the best personal-finance hacks is friction. Psychologists and economists often use the word to describe the little tasks and activities that introduce resistance in the path between a person and their intended goal.
In many ways, younger adults have grown up without friction. In fact, many of us are relying on various apps, tools and services to eliminate it in our day-to-day lives. During a recent busy week, I had my groceries and prescriptions delivered to my door; that errand would once have required multiple trips to the store. When I call a ride-share car, I don’t have to swipe my card or hand cash to the driver. I just touch a button on my phone.
In the case of my “never save your card info” rule, I’m increasing friction. That simple trick puts just a little bit more distance between me and the mindless, click-to-buy mentality that has gotten me in trouble before.
Charlotte Geletka , owner at Silver Penny Financial Planning in Atlanta, says “you have to break the consciousness with ‘Oh wait—I don’t need this.’ ”
Her hack for people struggling to do that: remove the credit card from your wallet, both the physical wallet and your digital one. That way, when you’re out with friends and tempted to overspend, you’re forced to do so with your debit card, which often forces you to think a little more consciously about the dollar amount.
I do something similar with tap to pay; I save my debit card info there, so that I’m not mindlessly racking up little expenses on a credit card.
A needed interruption
Lumutenga says she often sees clients struggling to set aside the time to tend to their personal-finance “chores.” So she has a hack she recommends to people within a few minutes of their first meeting: Put a recurring event on your personal calendar and label it “work on finances.”
For instance, I have a “move $20 toward your goal” reminder set up right now. Every time the reminder flashes up on my screen, I have to think: “Would I have moved that money if not for the notification?”
These simple things can interrupt the noise of a busy day to remind us of the goals we’ve set and the things we have to do to achieve them, says Katy Milkman , a professor at the Wharton School at the University of Pennsylvania and author of “How to Change: The Science of Getting from Where You Are to Where You Want to Be.”
“Attention is a big part of it,” Milkman says. “There’s lots of research showing that just simple reminders are really effective in getting people to save. It’s not a persuasion method. It’s really just ‘I brought this to the top of my mind.’ ”
The 10 p.m. rule
Sometimes, these mind hacks can sound silly. I could, of course, save my payment info to a shopping site and my entire financial plan wouldn’t come crashing down. I sometimes wonder if someone more logical or responsible wouldn’t need to brain hack their way to better money habits.
But the silliness of these things is part of their power, Geletka says. She often recommends her clients struggling with their cash flow to set a daily spending limit, which of course they’re not mandated to follow. But Geletka has seen that even telling ourselves something simple like “I can only spend $50 today” can make a difference.
“All of a sudden, you’re gamifying it,” she says. And when people play along, they’ll start paying closer attention to the daily transactions, as they’re happening in the moment. And, in Geletka’s experience, a hack’s lack of true teeth doesn’t damage its effectiveness. Once people see it work in their life, she says, they follow it.
Lumutenga shares a hack for cutting back on the promotions flooding our inboxes. She felt tempted by the constant emails from brands and didn’t want to lose out on discounts. So she set up a “deals” folder and routed all the promotions out of her inbox.
“I shifted to ‘I’m out of foundation, let me check my deals folder,’ ” Lumutenga says. “I decide when I’m going to shop or not. It eliminates the impulse to purchase things I wasn’t already thinking about purchasing.”
Anything that can get us to embrace better financial habits is a win, Geletka says. That’s why she routinely follows this hack: No online shopping after 10 p.m.
“Nothing good financially happens after 10 p.m.,” she says. “You gotta quote me on that.”
