Mind Over Money: How to Wisely Use Your Dollars

 In Personal Finance, Spending

I recently finished Mind Over Money and enjoyed learning some of the tricks Claudia Hammond uses to better leverage her money. While Thinking Fast and Slow remains my favorite recent book in the realm of psychology, I thought Hammond was much better at pulling out the relevant fiscal research that backed up her hypotheses. Hopefully you’ll learn some new tricks as well.

Never be Tempted to Upgrade In Stores

E ver been to a store and decided to buy something (say a new laptop) better than you were planning to walk out with after seeing the array of merchandise on display? Hammond notes that this is a typical phenomenon and an exacting retail strategy that stores use to tempt you to upgrade to the next best model. Her advice? “Whenever you are about to buy something, imagine how that item will look on its own when you get home. The one that suits your needs may be the smaller and cheapest of the lot, but so what? Try to ignore the similarr products, particularly the bigger and shinier ones. Impulse buys will be the only thing of its kind that you own – it won’t sparkle in comparison with anything else.”

M arie Kondo opened my eyes to the fact that there’s no need to fold clothes as if they are store displays, and this corollary, to remember that the item we’re bringing home will have no other comparison in our households, was the perfect example of the sort of neat thinking we all need in our lives. I see this external environment mimicking pattern play out more frequently now that I’m attuned to it – all I need to do is visit a contemporary child’s abode and I’m reminded that the parents wanted to replicate the daycare environment at home, leading to disorder and sprawl. Just contain yourself next time you want to replicate the abundance you see in a retail environment – you are not hawking your goods to the world to see.

The Tragedy of the Unscrupulous Diner

M y antipathy towards group dining can be traced back to the dilemma of the unscrupulous diner. I have been in enough situations where we all have to scrounge around for extra money to cover the bill because someone tried to freeload off of the rest of the group and didn’t calculate enough of a contribution to cover the bill. For me, since I can’t drink much and will never over-order or buy the most expensive entree, this usually means that I’m the subsidy for the rest of the group.

T hankfully, Hammond vindicates my hatred of the shared bill and says, “Why would we ever agree to share the bill equally?” The research and experiments she points to demonstrate that time and again, that there will either be a free-rider that pisses off everyone or everyone gets conned into paying more than they would had they dined in a smaller group. However, she rightly notes that there are social costs to not splitting a bill, and I agree, which is why I’m going to get suckered in for the long haul. Of course there are apps these days that help with bill splitting, but none of them will answer the most socially awkward question: who drank all the wine?

I n this instance, while Hammond doesn’t offer a palatable solution, I happily point out that you can ask for a separate check when you place your order. Your friends may think it strange, but then again, they can still split the bill amongst themselves – you’ve just chosen to take yourself out of the awkward turtle situation.

12 Money Types

O ne of the joys of Mind over Money was the references to older research that I hadn’t been aware of such as Herb Goldberg and Robert Lewis’ 12 Money Types. I was tickled to find that I squarely fell into one category (the freedom buyer). Which of the following do you relate to?

  1. Freedom buyer – you view money as a way of paying to not be told what to do
  2. Freedom fighter – you would like to see money be shared more equally
  3. Compulsive saver – you save money for the sake of it
  4. Self-denier – you are pessimistic about the future and don’t dare spend money that you don’t need to
  5. Compulsive bargain hunter – when a shopping trip is successful, it’s not because you’ve bought a lot, but because you’ve saved a lot
  6. Fanatical collector – you don’t collect money but anything else
  7. Love buyer – you buy admiration, attention, or people liking you
  8. Love seller – you are selling your love and make others feel good about themselves
  9. Love stealer – this one I didn’t get. The example was of a boss who is only nice to employees in hopes of keeping their wages low.
  10. Manipulator – you use money to get power and exploit people in order to get more money
  11. Empire builder – you are determined to be a leader
  12. Godfather – you bribe your kids to be good and are kind to others provided they do what you want them to

K nowing which type you and your closest kin fall into helps streamline your approach to money, especially when you must rely on someone else to run your budget or achieve a goal. If your mom is a godfather type for example, you’ll quickly need to make peace with either not accepting her financial help or being indebted to her in another form and possibly having to behave in a way that is not compatible with your nature. You don’t have to take the same stance every time, but you should be aware of how to manage the money personalities in your life.

The Lottery Myth

M y favorite lesson from Mind over Money is that “for all its pervasiveness and power in our world, money isn’t going to transform us. We can spend as much as we like, donate as much as we like, win as much as we like, and save as much as we like, but money will only help us to live a more fulfilled life if we know what to do with it. We need to be in control.”

I couldn’t have said it any better – having more money doesn’t mean we’re going to be happier or more fulfilled if we spend it on things and experiences that don’t align with who we are. In many ways, these past few years have been one extended lesson in this message. I never was and never will be a fashionista, so one thing I’ve learned to let go of is the desire to acquire a wardrobe when I know that having just a few key pieces I can wear repeatedly brings me so much joy.  Sure there are times when I need armor – but this is why I’d rather spend money on battle armor jewelry than on clothes that will wear out over time. Being able to redirect money to where it matters – political activism this year for me for example – leads to financial fulfillment because you can rest in the knowledge that you have done the very thing that you needed to do for yourself at that moment.

I will be back in early March after a much-needed getaway and time to think! Enjoy the stock market ride and if the party stops (hopefully not…it’s kind of nice to see that you’ve made some extra money every day without lifting a finger)…just remember that you’re investing for the long haul and that you don’t actually need whatever money you have already socked away. Do not panic sell and do not do rash things.

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