This chapter explores the idea that making one-time decisions that automate future decision-making is more effective than cultivating habits. It discusses the correlation between financial literacy and behavior change, emphasizing the importance of designing an environment that supports better decision-making. The chapter also explores strategies for managing money effectively, reframing savings as earnings for the future self, and discusses loss aversion and information aversion in relation to personal finances.
#218: Kristen Berman is co-founder of Irrational Labs, a behavioral product design company, along with Dan Ariely.
She has a fascinating job that involves looking into why people behave the way they do with their money, and discovering the easiest solution to help them create more positive financial behavior.
In short, she’s a proponent of redesigning the current financial system to make saving automatic and easy, and that’s part of what we discuss in this episode.
If creating better financial habits has been a challenge for you, or if you have trouble framing spending as a positive thing, rather than a loss, then Kristen has awesome advice for you.
Here are some key takeaways from the interview:
1. Habits are overrated - one-time decisions are more effective.
2. Simplify decision-making by giving yourself a rule-of-thumb to follow.
3. Pre-commit to your financial goals.
4. Measure process versus outcome.
5. Use accountability partners to reach your goals.
6. The Three Bs - Behavior, Barriers, and Benefits.
For more information, visit the show notes at https://affordanything.com/episode218
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