User’s Manual

Jonathan Clements

I’VE TAKEN TO TELLING folks that HumbleDollar is the site for folks who are striving to be rational about money—but who are acutely aware that they’re human.

Figuring out what’s rational is relatively easy. We should save diligently, diversify broadly, invest in stocks if we have a long time horizon, favor index funds, take on debt cautiously, only insure against major financial risks, avoid buying a house that’s larger than we really need and, once retired, worry less about dying young and more about living longer than we ever imagined. Yes, we can quibble about the details. Still, the broad outlines of a rational financial life are pretty clear.

But then there’s the human side. When I say “human,” I don’t mean individual quirks. I like to spend my money on travel and eating out, and don’t care much about the car I drive. For you, the priorities may be different.

Rather, by “human,” I mean the ways we stray from the rational financial life. We have a fun money account, where we trade individual stocks, even though we know it’s a loser’s game. We claim Social Security as soon as we’re eligible, because we can’t stand the idea that we’ll die young and get nothing back from the system. We go to the shopping mall and end up spending far more than we planned, thanks to a slew of impulse purchases.

None of this is so terrible—as long as we don’t badly damage our financial future. What if that’s a risk? We need to find a way to rein in our worst instincts. That’s the goal of a new chapter that’s just been added to our online money guide. The chapter discusses seven ways we fall short—and suggests a slew of strategies for doing better. Check out our user’s manual for humans:

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Just AskingNo Worries and Pay It Down. Jonathan’s two most recent books: From Here to Financial Happiness and How to Think About Money.

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