New research out of the University of Kansas’s School of Business is showing that those who consolidate their savings into a single account, rather than spreading it out across several, encourages saving. Led by assistant professor Promothesh Chatterjee, the study was actually four separate studies with a total of 566 participants. In these studies, participants could earn money for doing things and spend it on products. They discovered that those who maintain one account versus multiple accounts had a higher rate of saving. The theory was that people are predisposed to spending money, rather than saving, and that this is facilitated by vagueness. If you have multiple accounts, it’s not readily apparent how much you’ve saved. When you know exactly how much you have saved, you are less likely to spend the money.

So the issue isn’t so much one bank account versus five, it really comes down to knowledge and understanding how much you’re saving. It’d interesting to find a way to do a study in which you replicated this scenario but offered them a Mint-like financial aggregator that collected all that information for you and find out the impact of that knowledge.

(Click to continue reading…)

One of the issues with new wealth is that it can provide you with a feeling of giddiness. If you’ve just graduated from school, it can be a heady feeling to know that you have a lot more money coming in.

Sometimes, the difference seems so big that you lose perspective and begin spending money at will. When you’re so rich now, it seems as though you’ll have plenty of money to do what you want.

Unfortunately, this wealth effect can lead to poor financial behaviors — and even to debt.

(Click to continue reading…)

Frontline is a great program, I’m a big fan of their work, and a recent show focused on something that often graces the pages of personal finance blogs – retirement. It’s separated into five chapters:

1. The Retirement Crisis – A 9:51 minute look into whether the system is working.
2. “It Used To Be Much Easier” – 11:37 minutes reviewing how much simpler it was with pensions.
3. “The Tyranny” of Fees – 13:21 minutes with John Bogle of Vanguard fame
4. Are Index Funds the Answer? – 6:02 minutes looking at index funds
5. Advisers or Salesman? – 13:26 minutes looking at financial planners

This isn’t a “behind the scenes” expose like the ones I really like (The Choice 2008 was fantastic, as was Bush’s War) but instead is more like a “here’s what retirement investing is like today” that anyone can watch and understand. If you read a lot of personal finance blogs and keep yourself regularly informed about this subject, you won’t hear anything new.

(Click to continue reading…)

My husband is reluctant to apply for full-time professor jobs. One of the things holding him back is something that, as someone with a Ph.D. in Psychology, he is well aware of. It’s called Impostor Syndrome.

“I feel like I’m wearing a mask,” he says. “My students, and even many of my colleagues tell me I’m great, but I sometimes I feel like a fraud. What if I’m not as good as they say I am?”

(Click to continue reading…)

Dan Ariely is a behavioral economist, which is to say he mixes human behavior, psychology and economics together to give us a deeper insight into why we do the things we do. Each week, he does a Q&A column in the Wall Street Journal but I usually catch it on his blog. A little while back, Ariely fielded a great question that I think you guys would be interested in.

Dear Dan,

I don’t care about cars, never have. But I’m a sales executive, and people tell me I should own a nice car (BMW, Mercedes, etc.) to enhance my credibility to both my customers and sales team. I can afford either but would rather save the cash and buy a Honda. Does it matter?

—Cody

(Click to continue reading…)

To help combat impulse buying, j_stack shared his tip on Reddit:

To curb my impulse online shopping tendencies, I use Amazon wishlist instead of dumping everything in my shopping cart. I leave the item in there for a month or two, and come back to it later to see if I really want it. I almost never still want the item, and if I do still want it, I’ll know it’s something I’d really like to have.

edit: If I decide I don’t love something enough to ever buy it, I’ll nix it from the list, but the stuff that I stay on the fence about for a while can sit in my cart for almost a year. Then it becomes my christmas list.

This is the digital equivalent of waiting a day before you buy something you like and it’s a good tip.

(Click to continue reading…)

One of the great traditions is the summer vacation. The kids are out of school, and many parents have saved up vacation days or flex time that can be used to go on vacation.

Unfortunately, a summer vacation can get a little expensive. Whether you drive or fly, you need to come up with the funds to pay for your excursion. You shouldn’t go into debt for your summer vacation, though. You should come up with a plan to save up enough money for a summer vacation.

(Click to continue reading…)

With the release of the March 2013 CPI-U figures, we now know the variable interest rate on Series I Savings Bonds for the next six months starting in May and it continues to be low (but it’s an increase from the last six months – so that’s good right?).

The March 2013 CPI-U figure was 232.773 and the September 2012 CPI-U figure was 231.407 so we can calculate a semi-annual increase of 0.590% and we’d expect the variable component of the bond to be 1.18%. The only question is whether there will be any change in the fixed rate, which currently sits at 0.0%. With interest rates so low, no one expects that to change anytime soon.

That said, using the equation:
Bond rate = Fixed rate + 2 x Semiannual inflation rate + (Semiannual inflation rate X Fixed rate)
Bond rate = 0 + 2 x 0.0059 + (0.0059 X 0)
Bond rate = 0.0118

So we’d expect the interest rate on Series I Savings bonds to be 1.18% in May.