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Don’t Be Yourself

Jonathan Clements  |  Oct 22, 2016

WE’RE OFTEN encouraged to follow our instincts. But if we did that, many of us would sit on the couch drinking margaritas, eating Cheez Doodles and cruising online shopping sites, when we should be eating less, saving more and heading to the gym. Often, the key to a better life—financially and otherwise—is to get ourselves to take action we instinctively resist.
This is obvious advice if we’re overweight, rarely exercise, panic when the stock market declines and find our credit-card balances balloon with every passing month.

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Sobering Thoughts

Jonathan Clements  |  Oct 15, 2016

IF YOU DROVE DRUNK but got home unscathed, you wouldn’t wake up the next morning and think, “I guess it’s okay to get behind the wheel after 13 beers.” Yet, when handling our finances, we do that all the time.
“Markets generate a lot of data, but they don’t generate a lot of clear feedback,” writes academic Terrance Odean in his foreword to Michael Ervolini’s thoughtful book, Managing Equity Portfolios. “Outcomes are noisy.

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Committed

Jonathan Clements  |  Jul 9, 2016

I PROMISE TO BEHAVE better tomorrow. What happens when tomorrow becomes today? All bets are off.
Our broken promises might involve money, such as committing to spend less, save more and pay down debt. Or they might involve some other aspect of our life, such as committing to eat healthier, exercise more and drink less.
All this highlights our irrationality. We may not be experts in nutrition, physical education and money management. But we have a pretty good idea of how we ought to behave.

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Yes, We Must

Jonathan Clements  |  Jun 21, 2016

MONEY ISN’T AN END in itself. Rather, it’s a means to other ends. But what ends? Some people have a good handle on what they want from their financial life. But for others, it’s a lifelong struggle. They purchase endless possessions that bring only fleeting pleasure. They pursue goals that they belatedly discover aren’t all that important to them. Result: money worries, excessive spending, mountains of debt and fierce family arguments.
How can we avoid this mess?

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Choosing Less

Jonathan Clements  |  May 29, 2016

TOO MUCH CHOICE CAN be paralyzing. This is the reason many 401(k) plans have winnowed the list of funds they offer: Thanks to the smaller selection, participants are less likely to feel overwhelmed—and more likely to make an investment decision, rather than leaving their cash to languish in the plan’s money market fund.
I think this is a good strategy for other areas of our finances. For instance, you may make smarter investment decisions if you limit your choice by,

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Happy Thoughts

Jonathan Clements  |  Apr 23, 2016

THINK ABOUT THE BAD stuff that didn’t happen. Very few of us will have a year when we crash the car, our home burns down, our employer goes belly up and our big bet on a single stock goes way down. Yet all of these things could happen, which is why we buy auto and homeowner’s insurance, keep an emergency reserve and avoid big bets on a single stock.
Sound sensible? There are two great dangers.

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Financial Wellness

Jonathan Clements  |  Jan 8, 2016

COLUMNIST RON LIEBER of The New York Times emailed me earlier in the week, asking for help with a special online feature. The task: Grab a 4×6 index card and, in Ron’s words, “write whatever you want on the *lined* side. A list of 10 things. Or 20 if you write small. A picture. A quote. Whatever. But it should add up to Clements’s guide to financial wellness.”
This was trickier than it seemed.

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Just Feels Right

Jonathan Clements  |  Jul 5, 2015

MEIR STATMAN, a finance professor at California’s Santa Clara University, argues that financial decisions—like everyday consumer purchases—have three benefits: utilitarian (what it does for me), expressive (what it says about me) and emotional (how it makes me feel).
As we manage our finances, we insist our goal is strictly utilitarian, and that all we want to do is make money. But in truth, we often make decisions for expressive or emotional reasons—and these other motivations can hurt our stated goal of greater wealth,

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Ruled by Rules

Jonathan Clements  |  May 10, 2015

MOST OF US STRUGGLE with self-control. We eat too much, exercise too little and spend excessively. One solution: Adopt rigid rules of behavior.
For instance, I make it a rule to exercise every morning for at least 40 minutes, always buy whole wheat bread, avoid caffeine after 9 a.m. and eat fruit as a midmorning snack. I’ve followed these rules for so long that they’re no longer rules, but rather ingrained, unquestioned habits.
Not surprisingly,

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Farewell, Tom

Jonathan Clements  |  Mar 4, 2015

BESTSELLING AUTHOR Thomas J. Stanley died in a car accident over the weekend at age 71. His death has received scant publicity—which is surprising, given the popularity of his books and his impact on the way we think about money.
With co-author William Danko, Stanley wrote the 1996 blockbuster, The Millionaire Next Door. Who are the rich? It isn’t the folks with the flashy cars and designer clothes. Those aren’t signs of wealth.

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Plus Ca Change

Jonathan Clements  |  Jan 8, 2015

WHAT COUNTS AS GOOD financial advice doesn’t change much from one year to the next. In 2014, you should have owned a globally diversified portfolio, kept investment costs low, avoided credit-card debt, maxed your 401(k) and avoided annuity salesmen. Ditto for 2015.
So why do folks read the business section every day, buy personal-finance books and subscribe to business magazines? There’s an entertainment aspect: We like feeling engaged with the wider world.
But there’s also a practical reason: Even if good financial advice doesn’t change much from one year to the next,

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