Personal Finance Review – The Psychology of Spending & Saving Edition

January 6, 2008

We experienced usually warm weather this weekend so we spent a lot of time outside, taking advantage of the balmy temperatures before the cold returns.  It was the first time in a while I had a chance to workout; a busy work schedule and the cold weather have kept me out of the fitness routine.

I noticed something this weekend that made me stop and think about the psychology of spending and saving.  When I exercise I tend to eat better and when I’m slacking in the workout department I’m more likely to eat unhealthy.  I’ve found that when I’m in the fitness mindset I think more about what goes into my body since I just had to work hard to burn off some calories.

I think the same applies to personal finance as well.  When I’m focused on working hard to increase my salary, saving more money, and getting a better investment return I tend to spend less money.  I’ve had to work hard to build our net worth, the last I want to do is turn around and spend it away. On the other hand, if I’m not thinking about how many hours I had to work to earn money or what our portfolio returns are, I’m more likely to spend a little more money.

The good news is that when I’m “in the zone”, I’m not only increasing the acceleration of net worth accumulation, I’m also decreasing the depletion of our net worth.  The bad news is that when I’m in money denial, I’m earning less and spending more at the same time, having a double negative effect on our net worth. I guess the first step is being aware of this weird behavior so that I can avoid being loose with money in my financial mental downturns.  Anyhow, enough philosophizing about finances.  Checkout some of the good articles of the week:

Lazy Man & Money kicks off the Carnival of Peer-To-Peer Lending and is nominated for an award. Free Money Finance does a little money math on taxes and spending away your retirement fund.

The Digerati Life tells us why most investors don’t make money in the stock market and Generation X Finance says to take advantage of record oil and gas prices.

Suns Financial Diary talks about changes to FICO Credit Scores and Blueprint for Financial Prosperity reminds us that checking your credit score won’t hurt your credit score.

No Credit Needed writes about dividend reinvestment, Five Cent Nickel helps a reader with Roth IRA Income Limits, and the Mighty Bargain Hunter talks some more about valuing your time.

A guest post on Get Rich Slowly considers frugality and quality and The Simple Dollar asks how much frugality is too Much?

Finally, My Money Blog gives us a 2008 Financial Jump-Start Checklist, 5 Actions That Can Take 5 Minutes Or Less.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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