MONEY consumer psychology

4 Personality Quirks That Sabotage Your Savings

insecure girl
Grove Pashley—Getty Images

When you are your own worst enemy

They say it takes all types — but some types have a harder time saving than others. Are you allowing some of your less flattering character traits to derail your finances? Here are four personality types that sabotage saving.

1. The Insecure

In a consumer economy, advertisers work tirelessly to link products to personality. Do you drive a domestic car, or an import? Are the countertops in your home Formica or granite? Are you a Mac person or a PC person? Often, the answers don’t simply explain what we prefer — they suggest who we are, or at least who we’d like to be.

Playing upon consumers’ insecurities works like a charm. Ego sells lots of products and keeps huge swaths of the population on a treadmill of debt. Fight back by getting comfortable in your own skin and learning little ways to feel more confident every day.

2. The Impulsive

Let’s admit it: we live in a consumer-centered universe. Every screen we gaze into promises to deliver more delights to our doorstep (with free shipping and cashback rewards, of course). There are entire armies of designers, marketers, and retailers whose sole purpose is to anticipate what will tickle us next and magically make our wallets fall open.

In a consumer Candyland like ours, those who haven’t learned how to overcome impulse spending don’t have a chance. Without a dependable restraint system, they’re sure to wander toward the Gumdrop Mountains, fall into the Molasses Swamp, and never be heard from again.

3. The Impatient

Just one word separates a saver from a spender. A saver says, “I need it.” A spender says, “I need it now.” Purging that one pesky word from our consumer vocabulary can save us thousands of dollars over a lifetime. “Now” eliminates the option of shopping around for the best deal, it means we don’t have to plan and save, and it means we’ll think about the consequences to our budget later. If you’re trying to spend wisely, stop being impatient and start thinking of “now” as a hair-curling, four-letter word.

4. The Fearful

Spending wisely and saving for the future takes a bit of fortitude. To make real progress, we have to know who we are deep down, learn how to conquer fear, and take a few chances. Those who are afraid of money likely don’t understand it, or grew up in households where money was a constant source of anxiety. They might be able to pinch a few pennies, but profound success will always be elusive. The fearful wouldn’t dream of negotiating on price, they don’t feel comfortable making independent investment decisions, and they’re afraid to spend when presented with real wealth-building opportunities.

Saving money over the long term is no different than achieving any other goal. We have to duck and weave around our own insecurities and impulses and surround ourselves with like-minded people who can cheer us on and serve as role models for success. If you find yourself struggling, it might be time to take a hard look at the company you keep.

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TIME stocks

This Is Why Tech Bubbles Actually Happen

Andrew Burton—2015 Getty Images A trader works on the floor of the New York Stock Exchange during the afternoon of Feb. 13, 2015 in New York City.

Study's revealing new findings

We tap our phone, we expect to be able to make a call, send a text or open an app. We key in our PIN at an ATM, we expect to get cash. We punch in a time on the office microwave, we expect our lunch to heat up. In short, when we depend on technology for countless everyday tasks, we take for granted that it’s going to work.

A new study finds that this automatic assumption has a surprising, far-reaching dark side. Much as we expect the technology we interact with every day to be successful, we expect stocks of publicly traded technology companies to be successful — even if there isn’t any evidence that they perform any better than old-economy stalwarts.

We unconsciously confer on technology, especially new technology that we don’t really understand, an almost magical status. “We found that people weren’t particularly excited about the prospects of old technology,” says Christopher Robert, associate professor of management at the University of Missouri — Columbia and one of the paper’s authors. “You’re more likely to have faith that something you don’t really understand will work.
That’s because “technology” gets lumped together as this sort of monolithic entity, Robert explains. “We develop [a mental] shortcut that all of these technologies are successful and they work and then overgeneralize that perception to all technology,” he says. “We often don’t see its failures,” he points out, because those either never make it to market or fail to become a part of our daily lives.

How often do you think about Pets.com or the mini-disk? Probably not much. Now, how often do you think about Google or Apple?

“The success stories are very salient,” Robert says. “When you get an Apple or a Google… being really successful, people pay a lot of attention to that, but they don’t pay as much attention to the failures.”

This mental double standard makes us likely to view tech company stocks through rose-colored glasses. Robert’s experiments found that we’re were more likely to invest in (hypothetical) high-tech stocks than stocks of other industries, even when both produce similar financial results. We’re also more likely to ignore the cardinal rule of investing — that past performance is no guarantee of future results — when it comes to tech stocks. In experiments, subjects who saw growth in a tech company’s past were more likely to invest, assuming that the good times would just keep rolling.

Except, of course, the market doesn’t exactly work like that. The dot-com implosion of 2000 should have been a cautionary tale, yet here we are just 15 years later, with economists once again warning that sky-high valuations for today’s tech darlings could indicate a second tech bubble in the making.

“I suspect that the same processes might take place as they did [in 2000],” Robert says. “Of course, technology does keep marching along and is successful as writ large — however, individual companies might not be as successful.”

And when people pile into certain stocks because they just assume they’ll do well without looking at the fundamentals, they drive up valuations even further, and the whole phenomenon snowballs. “When you see a lot of investment going into technology-oriented co’s that don’t have any [profits]… that’s a sign that there might be a little bit of irrational exuberance regarding those companies,” Robert says. “You never see these companies that make asphalt shingles getting these huge, pumped-up PE ratios.”

MONEY consumer psychology

The Simple Mind Trick That Will Boost Your Savings in No Time

mirage calendar
Howard Sokol—Getty Images

If you think about how many years you have to reach long-term savings goals, it's easy to procrastinate. A simple tweak to your thinking will get you started saving much sooner.

Human nature being what it is, probably the best strategy to ensure you’ll sock money away and achieve long-term savings goals is to involve your fickle, easily distracted brain as little as possible. As renowned economist Richard Thaler explained in a recent Q&A with MONEY, it’s very difficult for humans to control our impulses, and therefore the wisest approach to saving is to remove it as a choice. Invariably in our lives, stuff comes up, and if it’s an option, we’ll find more pressing and seemingly good uses for money other than incrementally trying to hit goals that won’t be realities for decades.

“Here’s a model of saving for retirement that’s guaranteed to fail: Decide at the end of every month how much you want to save. You’ll have spent a lot of the money by then,” Thaler said. “Instead, the way to really save is to put the money away in a 401(k) even before you get it, via a payroll deduction.”

A new study published by Psychological Science has other insights about how to boost savings. In this instance, the trick isn’t turning your brain off but tweaking the way you think about savings goals. The gist is that you must think about the future as now, rather than, well, way off in the future. And the way to go about this is to consider deadlines for your goals in terms of days rather than years.

“The simplified message that we learned in these studies is if the future doesn’t feel imminent, then, even if it’s important, people won’t start working on their goals,” said Daphna Oyserman, co-author of the study and co-director of the USC Dornsife Mind and Society Center. “If you see it as ‘today’ rather than on your calendar for sometime in the future, you’re not going to put it off.”

In one part of the study, hundreds of participants were asked about when they would start saving for their (theoretical) newborn child’s college education. Some were told they had 18 years to reach this goal, while others heard their deadline would arrive in 6,570 days. These are the exact same amounts of time, yet the people who thought about the deadline in terms of days said they would start saving four times sooner than those who considered the event in years. A similar experiment concerning retirement savings yielded equally compelling results, indicating that thinking in days makes goals seem more imminent—and kicks people into action much, much sooner.

The takeaways don’t apply just to savings, but to sidestepping procrastination in order to reach goals at work or school as well. Tricking yourself into thinking about goals in terms of days rather than years, Oyserman said, “may be useful to anyone needing to save for retirement or their children’s college, to start working on a term paper or dissertation, pretty much anyone with long-term goals or wanting to support someone who has such goals.”

Read next: How a Bowl of Cashews Changed the Way You Save for Retirement

MONEY consumer psychology

How a Bowl of Cashews Changed the Way You Save for Retirement

Matt Furman Richard Thaler

Richard Thaler pioneered behavioral economics, and changed the way companies manage their 401(k)s.

As young academic in the 1970s, the economist Richard Thaler began compiling what he calls “the List,” a collection of the everyday ways in which real people fail to act as economic theory predicts. One item on the List: the puzzling reaction of his friends at a party when Thaler took away a bowl of cashews. The List became the seed of his pioneering work in the new field of behavioral economics, a field that has, among other things, transformed how 401(k) plans are designed. (If you were automatically signed up for your company’s retirement plan, you can thank behavioral research.)

Thaler, 69, is a professor at the University of Chicago Booth School of Business. (He tweets at @R_Thaler.) His new book Misbehaving: The Making of Behavioral Economics was published on May 11. MONEY editor-at-large Penelope Wang interviewed Thaler for the June issue of the magazine. The interview, which was edited, starts with a discussion of what happened with those cashews.

How can I make smarter money choices?
It helps to have what I call nudges. The lesson of my field, behavioral economics, is that we need to understand the ways in which we differ from the rational human assumed in standard economic theory. I call this idealized person the “Econ.”

My classic example of the difference between Econs and actual humans is something that happened years ago. I was having a dinner party for fellow economics grad students. Before dinner I served some cashew nuts along with cocktails, and everyone kept eating them. Soon their appetites were in danger, not to mention their waistlines. I grabbed the bowl and hid it in the kitchen. People were (a) happy, and (b) they realized their reaction conflicted with traditional economic theory. Econs are better off with more choices. We humans actually need help controlling our impulses—nudges.

How would “hiding the cashews” work with money?
Here’s a model of saving for retirement that’s guaranteed to fail: Decide at the end of every month how much you want to save. You’ll have spent a lot of the money by then. Instead, the way to really save is to put the money away in a 401(k) even before you get it, via a payroll deduction. And behavioral economics says a little nudge can help you to do that even better.

In 1994 I wrote an article advising auto-enrollment in 401(k) plans—putting people in the plan by default, while giving them an opportunity to opt out, so you still have a choice. Saving would happen without having to make decisions to do it every week or month. The 2006 Pension Protection Act even encouraged employers to use auto-enrollment, and now more than half of large plans do so. But many people still aren’t saving enough.

In fact, you say many plans are nudging people to save too little.
Most companies using auto-enrollment set the default contribution rate too low. It’s stuck at 3% of salary, which was never intended by the law. Can you get people to save more than the default? Part of the answer is to combine auto-enrollment with auto-escalation. Research I did with Shlomo Benartzi of UCLA showed that even if people think they can save only a little right now, they’re willing to accept future increases in contributions, such as when they get raises. A state-of-the-art 401(k) should start out with auto-enrollment at 6% and escalate to at least 10% or higher. The evidence shows raising the default to 6% won’t lead to a high opt-out rate.

Money

Outside of a 401(k), how can knowing a bit about behavioral economics help me make better decisions? Psychology and economics professor George Loewenstein, at Carnegie Mellon, has a phrase: hot-cold empathy gap. It means you have two kinds of emotional states, hot and cold. So if I’m thinking about what to have for dinner in the morning, when I’m not hungry, I’ll say I’ll have fish and salad. I’m in a cold state. But by the time I go out for dinner, I’ll have a weakness maybe for a cocktail, I’ll see ribs and a big bowl of pasta—I’ll be in a hot state. I’ll order the ribs.

The point George makes is that people overestimate the self-control they’ll have in the hot state. So we need to make concessions to our frailties, such as choosing a restaurant with healthier choices or making a list before you go shopping, to help you buy only what you decided to buy in the cold state. If you’re not putting enough away for emergencies or retirement, making commitments in advance, such as signing up for payroll withholding, can help.

You helped discover something called the endowment effect. It seems like something that would affect investors. Tell us about it.
It was one of the first behaviors I studied, and it shows we demand more to give things up than we would pay to acquire them. We studied this by showing how students valued coffee mugs we handed out. People who got the mugs demanded twice as much to give them up as people who didn’t get the mugs would pay to get one. The endowment effect overlaps with other behavioral phenomena, such as loss aversion—seeking to avoid losses more than we seek gains—and a bias for the status quo. For these reasons, investors tend to hold on too long to stocks that have gone down, hoping they will rebound so they can sell without realizing a loss.

If people aren’t as rational as economists assume, can I take advantage of that as an investor?
That’s exactly what some professional investors are trying to do. Behavioral economics offers a plausible explanation for overreactions by the market. For example, a long period of bad performance can lead to stereotyping. There was a period when Apple was considered an inept company on the road to bankruptcy. That was an opportunity.

But it’s not easy to beat the market. Most professionals fail, and research shows individuals are abysmal market timers, buying high and selling low. I don’t think I can beat the market, but I think my firm can. [Thaler is a co-founder of a money management firm, Fuller & Thaler, but does not choose its investments.] I keep my money professionally managed or in index funds.

Maybe I could at least use behavioral insights to spot times when there’s an irrational bubble.
I don’t think most people can. For example, research shows people buy real estate based on naive extrapolations. “Real estate prices in Scottsdale will never go down.” I think we can make two conclusions: One, we’re really bad at this. Two, with investments like target-date funds, which diversify your assets and rebalance automatically, you can minimize the damage.

It seems so obvious that people make mistakes, but your book has gossipy fun recounting pitched academic battles over the idea. Why do economists resist it?
Some thought human errors were random and so would cancel each other out, which the work of [economics Nobel laureate] Daniel Kahneman and the late Amos Tversky found was not true. Most of the errors go in the same direction. Or they thought that if the stakes are high, people make the right decisions. The mortgage crisis showed that people still make mistakes when stakes are high.

Governments have been getting interested in behavioral economics. What are they doing with the research?
I’ve been working with a group within the United Kingdom’s government called the Behavioural Insights Team. One of the first experiments in the U.K. was to encourage more people to pay their taxes on time. We just changed the letter that was sent out to people who owed money, and added the true fact that 90% of people pay taxes on time. So the only difference was that we were telling people, “You are in the minority.” If you are an Econ, this should be irrelevant. But it brought in millions of pounds in tax revenue a lot faster.

There are all kinds of opportunities. Climate change is a behavioral problem—telling homeowners they use more power than their neighbors tends to reduce consumption. So is obesity. Health care costs are partly behavioral. It makes sense to ask behavioral scientists for their ideas, and then test them rigorously.

What about the worry that nudges can manipulate people? It’s just looking to see how we can help people without forcing them to do anything. We didn’t invent the idea of nudging people toward certain choices—it’s been around throughout human history. When the government employs these strategies, there are important ethical questions, and Cass Sunstein and I wrote about this in our book Nudge. We insist the government has to be transparent. Critics forget you cannot have a world without nudging. If people have to remember to sign up for a 401(k), the employer is effectively nudging them not to enroll. Either way, you have to decide what the default is. We advocate picking the one that makes people better off.

MONEY deals

Earn $170 a Year From Your Junk Mail

junk mail on floor
Alamy

A market research firm will send you prepaid Visa gift cards in exchange for your junk mail

Junk mail. It’s the bane of my postal delivery existence. Chances are you hate it too, what with the insurance offers, vacation brochures, and more. It’s a waste of paper, annoying, and you wish your mailbox had a chute that sent it directly to the recycle bin. That will all change, however, thanks to a company named Small Business Knowledge Center (SBKC).

Why? Because, SBKC will pay you for your junk mail. You read that correctly. This company will pay you to send them your junk mail.

Why would a company pay you to send them your most reviled pieces of mail? Because they conduct market research that focuses on direct marketing (junk mail) in an effort to spot trends and provide “competitive intelligence” to their clients. In other words, they need your mail to do their research and reconnaissance. That’s great for people like you and me because it means that we can literally turn our junk mail into cash.

Here’s what you need to know.

What Kind of Junk Mail Does SBKC Want?

SBKC is looking for specific categories of junk mail. Lucky for most of us, what they want is very common and stuff we all probably receive multiple times per week.

  • Insurance: Health Insurance, Life Insurance, Auto/Property Insurance, etc.
  • Investments/Annuities: IRA/Rollovers, Mutual Funds, 401(k), Pensions, etc.
  • Mortgage and Loans: Auto, Home Equity, Mortgage, Personal Loan, etc.
  • Banking: Checking, Savings, Money Market, Certificates of Deposit, Rewards or Loyalty Programs, etc.
  • Credit Cards: General Use Credit Cards and Charge Cards, Retail/Department Store Cards, Affinity/Rewards Cards such as Airline, Hotel, Alumni, Club/Association Cards, etc.
  • Telecommunications: Wireless (network providers such as Verizon, AT&T or manufacturers such as Samsung or Motorola), Wire-Line (Landline/Home Phone), TV/Cable, Satellite, Internet, IP/Internet Phone.
  • Travel and Leisure: Hotels, Cruise Lines, Airlines, Car Rental Services.

How Does Someone Earn Money From Their Junk Mail?

SBKC members, called panelists, accrue points which are redeemed for rewards. Points are earned several different ways.

  • Direct mail: Once accepted into their program, panelists will receive postage paid envelopes. Simply place the junk mail in an envelope and mail once a week.
  • E-mail: Forward any qualifying e-mail to SBKC.
  • Bonus opportunities: From time to time, SBKC will offer additional opportunities such as surveys and secret shopping.
  • Referrals: Current members can earn additional points by referring others.

How Much Can You Earn From Junk Mail?

When panelists accrue 2,000 points, they can redeem those points for a $20 Visa prepaid gift card. SBKC sends out a monthly newsletter which includes point status and any bonus opportunities available. Each person’s point accrual rate is different and depends on many factors, but according to SBKC’s website, on average, panelists who participate frequently can expect to earn $20 worth of points every six to 10 weeks or so. That comes to about $100-$170 a year for junk mail.

How to Join SBKC

SBKC requires the completion of a short application. Applicants will first choose whether they want to apply as a consumer panelist or a business owner panelist (business owners have different opportunities to earn). The application, which is called a “panelist profile,” is simple and straight-forward. It asks for your name, address, date of birth, and income range.

Applicants will receive a confirmation e-mail thanking them for submitting their panelist profile and a notice that SBKC will contact them once their application is processed, usually within one to two weeks (two to three weeks for Canadian residents). Once approved, new panelists will receive a welcome kit with program details and information to get them started.

What Else?

  • There is no limit to the number of qualified pieces that can be forwarded to SBKC to earn points.
  • Not everyone is accepted into their program, so take the simple application process seriously. If they run out of space for applicants in certain geographic locations or they are at capacity for a specific demographic, you may be placed on a wait list.
  • SBKC takes steps to protect the privacy of their panelists by scrubbing any identification from pieces that are forwarded, shredding documents when done, and promising no solicitation.

This won’t make you rich, but every dollar helps, especially when the money comes with such little effort. It looks like junk mail just became valuable.

More from Wise Bread:

MONEY consumer psychology

This is Your Brain on Expensive Wine

150507_EM_BrainonWine
Scott Camazine—Getty Images

Here's one reason why you might get more pleasure from wines with extravagant price tags.

A new study in the Journal of Marketing Research confirms what prior research (and, in some cases, gut feeling) has told us for years: Most people can’t really taste the difference between cheap and expensive wine.

These new findings, by INSEAD marketing professor Hilke Plassmann and University of Bonn neuroscience professor Bernd Weber, go a step further than previous studies in explaining why people get more enjoyment from a wine they’re told is expensive and less pleasure from one they’re told is cheap—even if they are actually drinking the same wine.

“Expectations truly influence neurobiological responses,” write the authors.

But how much we’re swayed by that influence ranges from person to person. One key factor, the researchers found, is the structure of your brain. Everyone is somewhat suggestible to the placebo effect from being told wine is cheap or expensive, but some brains are more suggestible than others.

Specifically, people with more volume in areas of the brain controlling sensory awareness are less susceptible to marketing placebo effects. (That’s logical: They’re more likely to sense, on their own, if a wine tastes cheap.)

On the other hand, people with more volume in parts of the brain associated with reward seeking and emotional self-evaluation are more susceptible to marketing placebo effects from price tags. The authors theorize that expectations have a bigger effect on these people: As soon as they see an high price, it appears, they start anticipating a luxurious experience, whether consciously or not.

One big grain of salt? Neuroscientists don’t all agree that using brain structure to infer behavior or personality makes for sound science—and Plassmann and Weber acknowledge in their study that some researchers are skeptical of that methodology in general.

Though the authors used MRI brain scans to arrive at their conclusions, they also asked subjects to answer questions as another way of measuring how personality was correlated with susceptibility to prices. For example, they asked subjects how much they agreed with statements like “when I get something I want, I feel excited and energized” as a second way of determining how “reward-seeking” they were—and found a similar effect as in the MRI section of the study.

Previous blind tasting studies have also found that when prices are hidden, most people don’t enjoy expensive wines more than cheaper bottles. Surprisingly, they even tend to rate inexpensive bottles slightly higher.

MONEY everyday money

The Scary Link Between Credit Card Debt and Depression

woman holding fan of credit cards
Peter Muller—Getty Images

There's a significant relationship between depressive symptoms and short-term debt, according to a new study of 8500 consumers

A recently released study shows that people with credit card debt and overdue bills are much more likely to experience symptoms of depression than those who don’t have such debts, particularly if they are near retirement, unmarried or less educated. The more short-term debt a person had, the more frequently they reported feeling those symptoms.

The research, published May 1, comes from the Institute for Research on Poverty and the Center for Financial Security at the University of Wisconsin-Madison. It is based on interviews with 8,500 people between 1987 and 1989 and again between 1992 and 1994 — periods during which unsecured debt grew quickly in the U.S. — through the National Survey of Families and Households. NSFH survey respondents were asked to say how many days of the week they felt each of the 12 depressive symptoms used in the Center for Epidemiologic Studies Depression Scale. Researchers analyzed those responses and how they related to the responders’ self-reported debt profiles.

With that information (and some complex algorithms), the researchers found a significant relationship between depressive symptoms and short-term debt, defined as credit card debt and overdue bills (bills on which someone has owed a sum for more than two months). However, mid-term debt (like personal loans or auto loans) and long-term debt (mortgages and education debt) didn’t translate into frequent experiences with depressive symptoms among people who held it.

A few things to note about these findings: “Depressive symptoms” is not synonymous with clinical depression. Additionally, the data was collected well before the mortgage crisis and following recession, when long-term debt was the cause of many people’s financial hardships. Student loan debt has also grown significantly in the past 20 years. Since the financial crisis, lenders have restricted credit access, though credit is beginning to open up again.

Still, the implication that credit card debt and overdue bills correlate to depressive symptoms is something many people today can probably relate to. Not only can such debt be extremely expensive, by way of high interest rates and fees, but it can also seriously damage your credit standing, adding to the stress of the situation. Getting in control of your debt is crucial to improving your financial well-being, and it can be an emotionally rewarding accomplishment, too. You can use a free credit card payoff calculator to help you plan your way out of the dumps, and it helps to see how your credit fares along the way. You can get a free credit report summary every 30 days on Credit.com to track your progress.

More from Credit.com:

MONEY Financial Planning

10 Ways Our Grandparents Were Smarter About Money

grandfather with son
Sam Edwards—Getty Images

Pay cash, take care of your stuff, and always save for a rainy day.

Depending on your age and circumstances, it’s likely your grandparents’ relationship with money was forged by some different (and probably tougher) financial times. My own grandparents have been gone for decades now, but their lifestyles were studies in frugality and sharp financial management that I remember to this day. In honor of all the grandmas and grandpas out there, here are ten financial lessons we’ve learned from our grandparents:

1. Pay Cash

My grandmother never owned a credit card. She paid cash for everything and tracked every nickel in little paper passbooks. We found dozens of them when she died. She was meticulous. She was frugal. And she was always in the black.

2. Take Care of Your Stuff

Today, we live in a throw-away culture where it’s easy and relatively cheap to replace most things we own. Not so for our grandparents. Every item was considered an investment, and therefore, everything was diligently cleaned, waxed, oiled, painted, patched, and repaired. Their stuff lasted forever — and that saved money.

3. Have Practical Skills

Doesn’t it seem like our grandparents’ generation was filled with renaissance men and women? My grandfather farmed, raised livestock, built his own house, repaired machinery, and — I kid you not — divined for water using the twigs of a willow tree. With that level of skill, I wonder if he ever needed to hire anyone to do anything. Today, developing frugal skills is still a great way to build self-reliance and save money.

4. Get Creative

Folks who grew up during the Great Depression had to channel their inner creativity to survive. Their ingenuity helped them feed their families, earn an income, keep their kids clothed, and maybe stash a few bucks on the side. It’s the same today; discovering ways to boost creativity can still positively impact our budgets and keep us engaged and inspired.

5. It’s Better to Own

With few exceptions, it’s better to own than rent, especially during tough economic times. Access to money-producing assets (land, a house, a paid-off car, and the like) helped many generations survive and build wealth.

6. Save for A Rainy Day

No offense Suze Orman, but our grandparents and great grandparents invented the emergency fund. The idea of saving up for a rainy day is just smart financial strategy. Because our grandparents lived through some very lean years, they never allowed themselves to be lulled into thinking that today’s prosperity guarantees tomorrow’s.

7. Get Dirty

Our grandparents taught us that, if we’re lucky enough to have a little plot of land, we better put it to work by planting a garden. Gardens stretch our grocery budgets, promote healthier eating, and get us moving in the great out-of-doors. Few activities pack such a holistic health punch. (See also: 4 Things a Vegetable Garden Needs)

8. Live Together

No…not in that way. In earlier generations, it was more common for households to include mom and dad, their kids, and grandma and grandpa. More people living under one roof through these multi-generational arrangements meant more child care resources, more household help, and more sources of income.

9. Keep Your Wants Under Control

Slowly creeping wants can easily choke our budgets. Our grandparents were able to afford what they needed by keeping their wants modest and entirely flexible.

10. Small Luxuries Are Still Luxuries

Even our grandparents’ generation knew it: little luxuries now and then are good for the soul. But pampering doesn’t have to cost a fortune. An afternoon off, a leisurely meal out, a mid-day nap all sound quaint by today’s standards. But with the right frame of mind, they can still feel indulgent and be entirely therapeutic.

The weird thing is, we are (or will soon be) the grandparents of tomorrow. The economic times we’ve recently weathered have already left their mark on how we spend, save, and invest.

More from Wise Bread:

 

MONEY Shopping

7 Things That Annoy Shoppers—and Why They’re Not Going Away

There are obvious reasons why movie theaters and airports charge rip-off prices, and why milk and eggs are located in the back of the supermarket. But the common explanations for these annoyances often don't tell the whole story.

It would be great if some of the everyday annoyances consumers encounter while shopping, traveling, and going to the movies would simply disappear. Unfortunately, in all likelihood that just ain’t gonna happen. But it may help a little to at least understand exactly why the powers that be seem to intentionally be inconveniencing, confusing, and ripping us off at every turn. Here are the reasons behind 7 common shopper complaints.

  • Why is the milk in the back of the supermarket?

    milk in supermarket
    Patti McConville—Alamy

    It’s fairly common knowledge that grocery stores place milk, eggs, and other staples far away from the entranceway in order to tempt shoppers into buying all sorts of other goods they must walk past. This is undeniably one reason why supermarkets inconvenience the shoppers who’d love to be able to get in and out on quick errands.

    An NPR story points out, though, that there’s another, more practical reason for the placement of the milk, and it has nothing to do with coaxing customers into making impulse purchases. Another theory for why milk is usually in the supermarket’s back corner holds that this location helps keeps costs down. Milk is a heavy product, it needs to be restocked regularly, and it requires refrigeration. Delivery trucks can pull right into the back of the store near where the milk winds up for sale. That’s simpler and more cost-effective and keeps milk fresher than if the cartons were lugged through stores and stocked in refrigerators that are, say, right near the cash registers.

  • Why does water cost $5 at the airport?

    150430_EM_AnnoyCustomers_Water
    Shutterstock—Shutterstock

    The restriction on bringing liquids through airport security checkpoints means that anyone wanting a bottle of water while waiting for a flight has no choice but to buy in the terminal—and pay rip-off airport prices. At Los Angeles International Airport, the price of bottled water is so inflated ($5) that a lawsuit was filed. To some extent, the situation boils down to simple price gouging: Retailers know that there are no real other options if travelers want bottled water, so stores can charge whatever they want and people have little choice but to pay up.

    Yet a Wall Street Journal report points out that there are legitimate cost factors that lead to higher prices for water and other products sold at the airport:

    Airport stores are small, so there’s limited space for inventory. They also require off-airport warehouses. Deliveries to stores are often limited to off-peak hours and have to be made in small containers, because everything needs to pass through security screening. Employees have to be badged by airports and pass through security. All that adds time and cost.

  • Why does uncooked chicken cost more than cooked chicken?

    uncooked chicken
    Kristoffer Tripplaar—Alamy

    Grocery stores and warehouse clubs like Costco regularly sell cooked and seasoned, ready-to-eat rotisserie chickens at prices that are cheaper than uncooked chicken in the meat aisle. At first glance, this makes no sense. Cooked chicken is pricier to prepare, so why isn’t it cheaper to buy poultry you’ll cook at home?

    One explanation is that the rotisserie chicken is a “loss leader” meant to drive shoppers into the store when it’s late in the day and they’re desperate to pick up something easy to serve for dinner. Supermarkets might not make much money on these sales—in fact, they may lose money, hence “loss leader”—but they’re successful if they bring in a customer who might not otherwise be browsing the store.

    The other explanation for curious chicken pricing is that supermarkets sell lots of cooked chickens when supply is high and some are likely to go bad in the near future. Stores may make less money on rotisserie chickens, but at least they’re not throwing the chickens away. What’s more, if the rotisserie chickens don’t sell, the meat can be used in soup, chicken salad, and other profitable deli items.

  • Why don’t prices just end in round numbers?

    price stickers on cyan background
    Sarina Finkelstein (photo illustration)—John Lamb/Getty Images (1)

    Consumer life would be simpler if prices were round numbers—$12 rather than $11.99, for instance. But apparently the so-called “left-digit effect” has a big impact on shoppers’ decisions, and the first digit in a number makes a much larger impression than what comes at the end. So $11.99 seems like a much better deal than $12, even though there’s only a measly 1¢ difference.

    Research cited by The Atlantic reveals that stores can grab the attention of customers in a different way by utilizing extra-screwy pricing that ends in, say, .78, .67, or .21. Shoppers have grown so accustomed to seeing prices end in .99 or .95 that they become a blur. But when an item features an unconventional price ($21.68 say), it registers in a way that $21.99 or the flat $22 do not. The shopper is more likely to pause, take note, and (the store hopes) consider purchasing the item, as the special pricing is used to connote, well, special pricing—specifically, a deal.

    Another reason for such oddball pricing is that they’re part of a retailer’s secret code that helps stores keep track of various discount strategies. Employees at Gap and Old Navy know that their cheapest prices will end in .*7, while Target’s lowest clearance prices end in .*4. At least that’s what the prices meant not long ago. Retailers know that savvy shoppers have caught on to such pricing systems, and they’ve been known to tweak the code to keep customers on their toes. Don’t put it past stores to also use this kind of unusual pricing to grab shoppers’ attention and lead them to assume it’s a special deal even though the item isn’t even on sale.

  • Why don’t jewelry stores show prices?

    jewelry store
    Patti McConville—Alamy

    More often than not, it’s difficult if not impossible to see how much the sparkling items underneath glass in jewelry stores cost. This may very well frustrate customers, but as one jewelry store worker told NPR, the absence of prices is a carefully calculated strategy. To find out how much something costs, customers must talk to a clerk, who will be able to tell the story behind the item, discuss how it fits into fashion trends, remove it from the case for a closer inspection, and so on. By this point, the sales pitch is well under way.

    Studies have also shown that when consumers physically hold merchandise, they’re more likely to develop an emotional attachment and a sense of ownership. Not only are shoppers more apt to buy items they’ve touched, they’ve shown a willingness to pay more money for them compared with stuff that’s been kept at a distance.

  • Why does popcorn cost so much at movie theaters?

    movie popcorn
    Alamy

    OK, the obvious answer is that movie theaters charge ridiculous markups on popcorn and other concessions because they have a captive audience and people will pay. As this in-depth Marketplace report explains, however, there’s a bit more to it.

    One might think that theaters could actually boost profits by lowering prices on concessions and enticing many more moviegoers to get snacks and drinks. But those in the business are under the impression that filmgoers fall largely into two consumer categories—big spenders and extremely price-sensitive—and whatever money is earned from the latter would be negated by lower prices charged to the former. Also, it should be noted that theaters make very little money from ticket sales, meaning it’s essential for the business to milk customers for as much as they can at the concession stand. If it weren’t for rip-off concession prices, ticket prices would have to be much higher, and neither moviegoers nor movie theaters want that.

  • Why do some stores make you show a receipt in order to leave?

    Costco store
    Katharine Andriotis—Alamy

    Last fall, an Oregon man sued Costco for $670,000 for an incident in which he refused to show his receipt when leaving the store—and in which his leg was broken in multiple places in a scuffle with employees that allegedly followed. One might ask: Why do Costco and some Walmarts, Best Buys, and other major retailers demand to see receipts in the first place?

    There isn’t a big mystery here. The receipt check is a loss-prevention measure. The point is to lower theft, mostly by discouraging it with a policy in which everyone will be eyed over upon leaving the store. This doesn’t stop people from being miffed about confrontational store employees treating paying customers like criminals.

    Some retailers say receipt checks aren’t necessarily about shoplifting, but that employees are there to ensure customers have the correct model they were charged for, or supposedly provide some customer service along those lines. “That’s garbage,” one anonymous Best Buy staffer explained to the Consumerist. “It’s patronizing, and you deserve to feel insulted by statements like that.” Still, the Best Buy employee maintains the policy is a good one for retailer and customer alike, because without it, theft would rise and prices would have to increase to make up for the difference.

    Apparently, treating everyone like a criminal makes actual would-be criminals give pause to stealing from stores.

MONEY freebies

Free Comic Book Day Is Saturday, May 2

Chuck's Comics owner, Chuck Gower, holding a copy of Batman at his comic book store at 7 S. 6th Street in Terre Haute, Indiana.
Joseph C. Garza—AP Chuck's Comics owner, Chuck Gower, holding a copy of Batman at his comic book store at 7 S. 6th Street in Terre Haute, Indiana.

The formula for getting free comic books on Saturday is generally as simple as showing up at a comic book shop and asking for a freebie.

The first Saturday in May is always celebrated as Free Comic Book Day by thousands of comic book stores around the country. As the name indicates, shops give away comic books on this day, making it a dream event for comic fans. A search tool at the link above will help you find out what shops in your area are participating.

Customers can’t simply walk in and grab any comic they want, however. Participating stores generally have a select few titles they give away—among the potentially free comics this year at shops in your neck of the woods are books featuring characters like Spongebob Squarepants, Teenage Mutant Ninja Turtles, Transformers, Cleopatra in Space, the Avengers, Pokemon, Lady Justice, and Doctor Who. It’s expected that more than 5 million free comic books will be handed out on Saturday.

Why would stores and comic book companies want to give away their products at no charge? In the long run, the idea is that a comic giveaway will serve as something of a gateway drug—a small freebie that’ll help get young readers hooked and turn them into lifelong customers.

Free Comic Book Day works as a successful business ploy in the short run as well because giving stuff away—ice cream, donuts, pretzels, 7-Eleven Slurpees, supermarket food samples, etc.—is generally considered a great way to immediately boost sales. Customers who come for freebies often wind up opening their wallets to buy other things, and Comic Book Day is always one of the biggest sales days of the year for comic shops.

Anyway, Saturday is your chance to snag some comic books for free. In order to get the best selection of comics, show up at your local shop early. At some locations, fans have been known to line up outside before stores open.

For more about what Free Comic Book Day is all about, this promo video offers explanation:

You might also consider the Free Comic Book Day sales pitch below from Mark Hamill, who is not only Luke Skywalker from “Star Wars” fame, but has also served as the voice of “The Joker” on “Batman: The Animated Series.”

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