TIME psychology

Why You Spend Too Much Money and How to Stop

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Getty Images

Eric Barker writes Barking Up the Wrong Tree.

  • The word sale makes us less likely to comparison shop and yellow tags fool us into thinking we’re getting a discount even when we’re not.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY consumer psychology

How Your Money Beliefs Are Hurting You

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Barbara Taeger Photography—Getty Images

We make things up about money and believe them.

What you believe about money drives your financial behavior. Finding out your beliefs is a key step to solving various problems, such as money conflicts in relationships.

Money doesn’t actually exist in reality. It isn’t gold or bank account balance or the pieces of paper in our wallet — it’s this conceptual thing, a promise, an agreement, delivered in measurable units, which we later exchange for something we want.

To grapple with this concept, we make things up about money and believe them. These beliefs act like a kind of programming language, which I call Money Operating Systems.

Your Money OS is a very basic belief about money that influences all your financial behavior. This system you install, unwittingly, controls how much you save and spend, whether you invest, how you invest, how you negotiate for a salary and how you feel about all of that.

Your past experiences with money, starting with your early memories of it, created your Money OS. It also came from your parents or the environment you were raised in.

Recognizing your belief helps you tackle your money woes, or those with your partner. Here are five of the Money Operating Systems I see most frequently:

  1. “There will always be enough money.” People with this belief can be high earners, but sometimes they’re average earners who just live a simple lifestyle. If you have this belief about money, you need to be careful. Make sure you understand how much money you need for your financial future. Over-optimism causes under-saving.
  2. “If I am good, the universe will give me what I need.” A positive world outlook doesn’t lead to productive financial behavior. Saving and investing rarely happen, because these folks believe that their financial health is a function of virtuousness.
  3. “Money makes me valuable.” They are often the people who drive the big flashy cars, and they work to have other people perceive them as successful. Money intertwines with their self-worth. Their ego grows with their bank account. But if they are unsuccessful, their confidence suffers.
  4. “There will never be enough money.” This one is pretty self-explanatory, and very common. People with this money belief will be either over-spenders or under-earners, and they keep creating the circumstances to prove this outlook true. They may justify holding on to poorly paid positions or overspending their high income.
  5. “Money is bad, the root of all evil.” These people believe that business and capitalism are responsible for social ills. They often righteously live without a lot of material possessions. Their negative opinion of money usually leads to destructive financial behavior.

These are only some of the beliefs that determine what is possible in your financial life. It took me some time to be analytical about my own money. I recognized my own system and how it kept me locked in cycles of overspending and feelings of worthlessness, and I’ve since transformed my experiences with money.

So where do you begin to see yourself here? What about your honey?

Hilary Hendershott, MBA, CFP, is founder and Chief Executive of Silicon Valley-based Hilary Hendershott Financial.

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MONEY Shopping

The Latest Sign That The Economy Is Getting Back on Track

A family uses the self-checkout at the Wal-Mart owned Sam's Club in Bentonville
Rick Wilking—Reuters A family uses the self-checkout at the Wal-Mart owned Sam's Club in Bentonville, Arkansas June 4, 2015.

Consumer spending accounts for two-thirds of US economic activity.

U.S. consumer spending recorded its largest increase in nearly six years in May on strong demand for automobiles and other big-ticket items, further evidence that economic growth was gathering momentum in the second quarter.

The Commerce Department said on Thursday consumer spending increased 0.9% last month, the biggest gain since August 2009, after an upwardly revised 0.1% rise in April.

The sturdy increases suggested households were finally spending some of the windfall from lower gasoline prices, and capped a month of solid economic reports.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have been unchanged in April. Economists polled by Reuters had forecast a 0.7% rise in May.

It was the latest sign that growth was accelerating after gross domestic product shrank at a 0.2 percent annual rate in the first quarter as the economy battled bad weather, port disruptions, a strong dollar and spending cuts in the energy sector.

From employment to the housing market, the economic data in May has been bullish. Even manufacturing, which is struggling with the lingering effects of dollar strength and lower energy prices, also is starting to stabilize.

The firming economy suggests the Federal Reserve could raise interest rates this year even as inflation remains well below the U.S. central bank’s 2 percent target.

Spending on long-lasting goods such as automobiles jumped 2.2 percent last month, while outlays on services like utilities rose 0.3 percent.

When adjusted for inflation, consumer spending increased 0.6 percent, the largest jump since last August, after being unchanged in April.

Personal income increased 0.5 percent last month after a similar gain in April. Income is being boosted by a tightening

labor market, which is starting to push up wage growth. With households stepping up spending, the saving rate fell to 5.1 percent from 5.4 percent in April. Still, savings remain at lofty levels.

Inflation pressures remained tame last month despite the acceleration in consumer spending. A price index for consumer spending increased 0.3 percent after being flat in April. In the 12 months through May, the personal consumption expenditures (PCE) price index rose only 0.2 percent.

Excluding food and energy, prices edged up 0.1 percent after a similar gain in April. The so-called core PCE price index rose 1.2 percent in the 12 months through May, the smallest gain since February 2014.

MONEY consumer psychology

When Money Can Bring You Happiness

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Matt Dutile—Getty Images

Here are 3 reasons to spend yours wisely.

You’ve heard the refrain countless times: Money can’t buy happiness.

Or love. Or class, for that matter.

But a wave of new research suggests that cash can indeed increase your pleasure—if you manage it the right way.

In fact, the influence of money on well-being is such a hot topic that experts around the country have devoted their studies to it.

Want a peek at what some of them have discovered?

We asked three researchers who spend their days delving into the ties between money and satisfaction to divulge their most intriguing revelations—and explain how you can leverage their insights to get happier.

Professor Michael Norton Says … Spend on Others to Be Happy

A professor of business administration at Harvard Business School, Norton has an interest in the intersection between finance and personal satisfaction that stems from his diverse academic experience.

After earning a Ph.D. in psychology, Norton received a fellowship to study business at the MIT Media Lab and the Sloan School of Management.

“Considering how much time people spend thinking about how to increase money and happiness, [I wanted] to figure out the relationship between the two,” the co-author of “Happy Money” explains. “[I wanted to know], when it comes to how we spend, are we getting it right?”

His Key Findings Initially, Norton, 40, uncovered that people spend most of their money on themselves.

“But my fellow researchers and I thought maybe this wasn’t the best way—that an outsized focus on the self might be part of the reason why having more money doesn’t necessarily make us happier,” Norton says.

To test his hypothesis, Norton designed a study in 2008 in which participants rated their happiness before being handed an envelope containing cash. Half were instructed to spend the money on a personal expense or gift for themselves; the rest were told to donate it or buy a gift for someone else.

The results? Those who gave the money away reported higher levels of satisfaction, whereas those who spent on themselves weren’t any happier.

Curious to understand the implications, Norton conducted a few more experiments.

In one, Belgian salespeople received 15 euros to spend either on themselves or on a co-worker. In another, recreational dodgeball players were asked to use $20 for their own purposes or for a teammate’s.

Time and again, people who gave money away reported increased happiness compared with the control group.

Not only that, but their performance improved. For every $10 a salesperson spent on herself, the employer reaped $3 in sales—but every $10 employees spent on co-workers translated to $52 in sales.

Likewise, charitable dodgeball teams scored more goals. Every $10 spent selfishly led to a 2% decrease in wins, but $10 spent on teammates increased them by 11%.

How to Boost Your Own Bliss While any degree of generosity will up your joy, some kinds of giving are more powerful than others. “The closer you are to the recipient, the happier you’ll be,” Norton says.

So buying flowers for your mom has a greater effect than, say, contributing to a stranger’s Kickstarter campaign.

And while the amount you spend doesn’t influence your happiness, Norton says, theimpact of your contribution does.

For example, when it comes to charitable giving, you’ll get the most bliss for your buck if you donate to organizations that create a personal link between the giver and the recipient, such as Kiva or Adopt A Child.

But regardless of who you give to, try to make it a habit. “The happiness surge you feel from a one-time gift eventually wears off, but people who chronically give are happier overall,” Norton says.

Professor Cassie Mogilner Says … Shell Out for Experiences to Be Happy

In 2004, when Mogilner was working her tail off as a marketing Ph.D. candidate at Stanford, she perpetually found herself strapped for cash and time.

“In business school, there’s so much attention focused on the bottom line,” says Mogilner, an associate professor of marketing at the University of Pennsylvania’s Wharton School. “But I realized that, for me, time felt like a much more precious resource than money.”

Intrigued, she began to channel her research efforts toward investigating the association between time, money and happiness.

Her Key Findings Over the past 10 years, Mogilner, 35, has found that time is a significant happiness predictor because, more so than your possessions, how you spend your spare hours reveals your interests and unique “you-ness.”

Just look at social media: People share photos of weddings, vacations and delicious dinners—but you don’t see many posts about trips to the mall.

To that point, Mogilner has also investigated how long we enjoy the mental boost that comes from temporal experiences versus material goods. “We get used to a new pair of shoes very quickly—it’s a phenomenon known as hedonic adaptation,” she says.

So while you might be psyched about your new boots at first, before long, they’re relegated to the back of the closet. Instead of being a source of joy, they now serve a purely functional purpose.

“In contrast, we adapt more slowly to experiences,” Mogilner says. “The way we spend time becomes a part of our memories—our personal narrative.”

People also tend to feel less regret after shelling out for a good time, adds Mogilner.

“After you spend $100 on a dress, you can see the other dresses you didn’t buy right there in the store,” she explains. “But if you spend $100 at a restaurant, you’re less likely to second-guess your decision because you can’t see the alternative meals you passed up.”

How to Boost Your Own Bliss Mogilner’s latest research focuses on the concept of buying more positive time—such as renting an apartment closer to work as opposed to buying a luxury car in which to commute.

“Our lives are the sum of our experiences, so we should be supremely deliberate in spending our time in the best and happiest ways possible,” she says.

Her preliminary findings? People are more satisfied when they outsource a chore anyone can do, like cleaning the house or picking up dry-cleaning.

And when it comes to deciding how to use the time you’ve just freed up, Mogilner says you can maximize your happiness by keeping a few points in mind.

“Activities with a social aspect have the strongest effect,” she says, pointing to things like a family picnic, a concert with friends or a date night with your spouse. “Social activities increase happiness because they cultivate relationships with others—and having strong, stable connections with others is the most important ingredient for well-being.”

Another satisfaction inducer, she says, is experiencing out-of-the-ordinary events—such as taking a vacation somewhere new and exciting—which will have a greater impact on happiness than everyday pleasures.

Speaking of vacations, you can get even more happiness bang for your buck if you book your trip well in advance.

Research published in the journal Applied Research in Quality of Life found that just anticipating a getaway is as enjoyable as the trip itself. So start planning your winter break—now!

Professor Jeffrey Dew Says … Get on the Same Financial Page With Your Partner to Be Happy

Fifteen years ago, Dew and his wife were colleagues in the mental health field, but partway into his career, Dew had a change of heart and decided to enroll at Penn State for a dual Ph.D. in human development and family studies.

His transition back to student life had major consequences: He and his wife lost their benefits and half their income.

“I wondered how the change in our financial situation might impact us as a couple,” says the 38-year-old Dew, who’s now an associate professor in the department of family, consumer and human development at Utah State University. “I looked at the scientific literature, and found that not many researchers had asked this question.”

So he decided to explore it himself—ultimately uncovering a major connection between money and marital happiness.

His Key Findings In 2012, Dew and his colleagues analyzed data after following married couples over the course of five years. In an initial survey, the spouses were asked how often they fought about various topics, including money, chores, intimacy and time spent together.

Dew was particularly curious to see if any of those arguments correlated to divorce rates, and found a striking trend: For men, money fights were the only conflict that predicted a split. For women, money and intimacy were equally loaded—but financial disputes were a much stronger divorce determinant.

In fact, couples who argued about money several times per week were 37% more likely to divorce than those who only had financial spats once a month.

Why are finances such a fraught subject? Dew has a few guesses.

“Money fights are frequently a stand-in for bigger relationship issues,” he explains. “On the surface, an argument might appear to be about overspending, but underneath, it’s a struggle over trust or power.”

Plus, if you’re under financial duress, there’s likely an added layer of stress to a relationship—and that can take a serious toll.

So Dew and his team did a follow-up study in 2013 with 450 married and cohabiting couples, with the goal of determining how happy couples combat financial pressures.

“We looked at the frequency of their financial management behaviors, such as creating a joint budget and putting money aside for retirement,” he says. “[And what we found is that] the more often couples engaged in sound financial practices together, the more likely they were to be happy.”

How to Boost Your Own Bliss The secret to happiness, according to Dew, is to get on the same financial page with your partner by opening the lines of communication as soon as possible.

That’s not to say you have to agree on everything. “Most issues can be worked through, although it will take compromise from both sides,” Dew says.

Dew’s suggestion: Commit to regular money dates—be it monthly or quarterly.

“And try sandwiching these financial discussions between two enjoyable activities, so that they’re less stressful,” Dew says. Consider opening a bottle of wine while you go over the numbers, and then head to dinner or a movie afterward.

One thing to focus on during your money date nights? A financial goal that’s meaningful to both of you, such as saving for a dream trip to Hawaii two years from now or paying off your house by 2020.

“It’s so easy for money to drive people apart,” Dew says. “But by having a shared objective, you can instead use it to bring you closer together.”

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MONEY retirement planning

You May Have Already Spent Your Inheritance

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Seb Oliver—Getty Images

More would-be heirs are getting gifts now from older family members.

When it comes to retirement planning, most people talk about the traditional stool with three legs—employer pensions, Social Security, and individual savings. And yes, all three legs look pretty wobbly right now. But there’s an additional leg that no one talks about but many seem to be counting on: an inheritance.

Some 51% expect to inherit money from older family members, according to a recent HSBC survey of 16,000 working-age people. Two thirds of this group believe that windfall will help fund their retirement, and more than 25% expect this money to fund it largely or completely. Perhaps for a few, this is a realistic expectation. But for most of us, the data are starting to suggest that we’d better not count our chickens before they hatch.

Back in the 1980s, economists were predicting a huge inter-generational wealth transfer from the so-called G.I. and Silent Generations (born 1901 to 1945) to the Baby Boomers (born 1946 to 1964). However, a Bureau of Labor Statistics report published a few years ago found that there was little evidence of an “inheritance boom,” and that inheritances as a share of household net worth actually fell from 1989 to 2007.

What has been increasing, both in frequency and in dollar amounts, are so-called “intra-family cash transfers,” all those times older family members help out their children and grandchildren financially during their lifetimes. According to a new study from the Employee Benefit Research Organization, 44% of older households (age 50 or above) gave money to their children or grandchildren during the two years ending in 2010, up from 38% in 1998.

And we’re not talking about just birthday money or graduation checks. Of those older households who gave to their families, the average amount is more than $10,000—enough to be considered a major expenditure in their household budget.

Estate planners often say that it’s smarter for older people to give away their money gradually while they are alive, since those cash transfers can minimize inheritance taxes for their heirs. But here’s the problem: even though those gifts reduce estate taxes, they probably don’t improve the retirement readiness of the younger generation. That’s because the money typically gets spent on immediate needs, such as mortgages, medical care, and college tuitions, or perhaps a few splurges.

In short, if your parents or grandparents have given you major financial gifts, chances are you’ve already spent some of your inheritance. And if those gifts continue, your inheritance may be greatly diminished or even completely gone by the time the will is read. So much for the bailout of your retirement plan.

To be on the safe side, it’s probably wise for anyone still in the “accumulation” phase of saving for retirement to not plan on any kind of inheritance at all. And if you have already received living cash transfers from your older relatives, make sure to keep up your own contributions to your retirement savings, so that you may have enough set aside to do the same for your own children and grandchildren.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

Read next: This Is the Best Way to Protect Your Retirement Savings

MONEY Smart Spending

How to Splurge (on National Splurge Day!) Without Busting Your Budget

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Paul Taylor—Getty Images

Or feeling remorse.

We’ve all been there: The excitement of a big splurge purchase can turn into feelings of guilt or even disappointment in as much time as it takes to walk through the checkout line.

But believe it or not, splurging done right can actually be good for your happiness and even your budget.

“Allowing yourself to have a splurge and enjoy it can actually keep you on track with your other budgeting goals,” says Kit Yarrow, professor of consumer psychology at Golden Gate University, author of Decoding the New Consumer Mind, and a MONEY contributor.

Thursday is National Splurge Day, a faux holiday created by Adrienne Sioux Koopersmith about 20 years when she came up with the idea for the celebration – you guessed it – on a whim. But with a little thought, you can make the most of your splurges today.

Splurge on Experiences

One way to get the highest happiness out of your splurge buys is to spend on experiences, says Michael Norton, professor of business administration at the Harvard Business School and co-author of Happy Money: The Science of Smarter Spending.

An evening out with friends or a vacation is a more reliable way to get the most bang-for-your-splurging-buck. And the happy memories from the experience usually last longer than material goods.

“The key pitfall of splurging is that when we splurge, it tends to be on stuff: TVs, clothes, iPhones,” Norton says. “But research shows that stuff fails to pay off in much happiness.”

Splurge on Others

There is a new body of research that shows the tremendous emotional rewards of splurging on other people, says Yarrow. Simple gestures like taking someone out to lunch or buying them something they’d never get for themselves can help you feel happiness in your connection with them.

“There is a rich reward that you get back from treating somebody else,” says Yarrow. “You can’t buy that level of emotional reward for yourself.”

Splurge Within Your Budget

But what about splurging on a budget? A virtually sure-fire way to feel guilt after a splurge is to spend outside your budget. Norton notes that worrying about debt has an enormous negative effect on your mood.

“When splurging, committing to stop before you go into the red helps to ensure your purchases will increase rather than harm your happiness,” Norton says.

Smaller, planned splurges will also help you stay in your budget, adds Yarrow. “Think of shopping like dieting: If you’re in deprivation mode for a long time, it ultimately leads to an unplanned binge.”

Splurge Without Spending

And you can always “splurge” on things that don’t cost a lot, or are free. Make time for yourself to do something you enjoy, like taking a run with your dog or watching a movie with loved ones.

With a little planning this National Splurge Day, you can feel like you treated yourself with no price tag attached.

 

MONEY First-Time Dad

3 Financial Lessons For Dads on Father’s Day

Brightcove:

You may want a tie, or a car. But you should know these three things this Sunday.

One day last August, my then six-month-old son fell face first from his swing onto the wooden floor half-a-foot below. Luke was a mobile tyke even then and I had forgotten to strap him into his seat, despite repeated instructions from Mrs. Tepper who had left him in my charge an hour earlier.

Panic ensued. I rushed into his room after I heard the thud and consoled my understandably miserable infant. A bump quickly rose on his forehead and I phoned our doctor thinking I had caused serious and permanent injury. The pediatrician asked me (in that tone doctors have when you call them off-hours for questions apparently beneath their dignity) if Luke was vomiting or unconscious. No. Any kind of bleeding? No. Keep an eye on him, but he’s probably fine. Which he was.

But I spent the rest of the night in silent terror as the bump deepened. When he finally went to sleep that night, I snuck into his room and put a finger beneath his nose. Yes, he was still breathing.

Fast-forward to last month. Luke had determined to test the limits of his physical universe and ran headfirst into the side of our bathtub. He came away with a bloody, swollen nose. Mrs. Tepper called the doctor for instructions (and a dose of vague condescension), while I tended to Luke. But there was no panic, no unease, no nagging fear that our son had endured some critical blow. I didn’t feel the need to check his breathing in the middle of the night. Parenting, like most things, improves with time.

The same is true of your ability to deal with money. I had just started at MONEY when Mrs. Tepper became pregnant, so it’s not as if we had ample time to set up an emergency fund or sketch out a meaningful budget before his birth. Over the course of our first full year as parents, we’ve had to learn the finances of parenting—even if one of us writes for a personal finance brand.

Here is some of the hard-won wisdom I’ve gleaned from my sometimes beautiful parenting grind.

You’ll Spend More Than You Think

There’s a strange cognitive dissonance that new parents must embrace. The decision to bring a child into the world, at least in my case, tends to be uninformed by finances. Are we ready to care for children is more of a question of values and love than a cold calculation of what you can afford. We didn’t estimate the weekly cost of child care, how long Mrs. Tepper would take off for maternity leave, how much of that was paid, and how we’d afford rent and food without her paycheck. We didn’t look into how a newborn would inflate our insurance premiums, which of our policies should cover the tyke, or how much a delivery would set us back. And we were completely ignorant of the price tag on all the day-to-day items, from strollers and cribs to diapers and wipes, that he would need. We both had jobs and figured we’d figure it out.

But bearing a child is an intimately financial decision, especially since our society does so little to palliate the pocketbooks of new parents (whether it’s paid leave, child or health care.) We’ll likely spend a quarter-million dollars on Luke before he hits college-which could easily cost another quarter-million dollars. How is it even possible to spend that much?

Experience informs. Putting aside child care, which cost us more than $15,000 over the past 12 months, it’s not terribly difficult to see where the money goes. Not only did his stroller run us close to $1,000, but we just spent another $50 on something called the Parent Organizer, a device that attaches to the stroller and holds the coffee you need to drink to stay awake because you haven’t slept well in over a year, and some fabric cleaner that removes spilled milk (and coffee) from the stroller. We spent about $1,000 this year on diapers and wipes and creams that make him happy and don’t cause his skin to break out in hives. Our credit card statements are filled with hundreds of similar purchases.

I’m glad we didn’t budget out our lives before we decided to have Luke. Parenting shouldn’t be a decision based solely on affordability. Life is too short. But, in case you were curious, this is why your friends with kids aren’t particularly enthusiastic about your two-week excursion to Lisbon.

Be an Equal and Honest Partner with Your Spouse

Couples tend to obfuscate when it comes to discussing money and finances. Most avoid the topic, as an American Express survey found, while others lie to their partners about money. While you may know that you need to chat about budgeting and debt and spending, as a recent MONEY survey found, the actual process of doing so can be less than enjoyable.

In the grand scheme of things, Mrs. Tepper and I haven’t been adults for all that long. We’ve been out of grad school for about three years, married for almost two, and parents for 17 months. Crafting budgets that account for all of the expenses surrounding Luke is hard enough, not to mention the difficulty coming up with a plan for saving for college without going broke. For a few pointers, I turned to CFP Board consumer advocate Eleanor Blayney.

First and foremost, says Blayney, learn what money means to your spouse. “For some it means security, so they’re looking to save, while for others it offers prestige.” If your husband or wife is a hoarder or a spendthrift, there’s often a reason why. Knowing where your partner comes from can help decrease tension and clarify his or her point-of-view.

Next Blayney recommends you and your spouse go into separate rooms and estimate how your after-tax income is being spent. That is, each of you should write down how much you believe you’re putting toward three buckets: 1) fixed, non-variable expenses (like your mortgage and child care); 2) non-discretionary, variable expenses (food and transportation, for example); and purely discretionary expenses (like entertainment).

After you’ve complied your list, Blayney suggests, “pour a glass of wine and compare notes. Identify real discrepancies in your outlook and find common ground.”

Everyone should be involved in financial decision-making. When the dynamics of a family evolve, spouses often take different domains of domestic responsibility, from managing the children’s homework to paying the bills. If one spouse is completely removed from any understanding of financial decision-making, or appreciation for long-term goals like retirement, conflicts can metastasize with time.

Therefore, be completely transparent about your financial choices. Both spouses should appreciate the savings rate and investing choices that are being made and what benefits this long-term planning will produce. Think of it as “marriage insurance.”

“Focus on common goals—whether it’s a boat or retirement, “says Blayney. “You’ve got to decide as a couple how much to save together.”

Consider Your Mortality

If you have a child and a spouse who depend on your income to support their lives, you need life and disability insurance. The concern for a lot of parents can revolve around which type of insurance to get and for how long. (Not to mention confronting your inevitable demise.)

“I’ll have clients who have gone to buy insurance and the broker asked how much can you afford?” says Dallas-based financial coach and planner Katie Brewer. “They’ll come away with much more than they need.” That’s money that could be put to better use elsewhere. The best route is to buy a 20-to-30 year term policy that covers about 10 times your income. You should only worry about covering your income for a certain period of time, and term insurance is the cleaner alternative. You can most likely to find low cost options through your employer, but you may be restricted in the amount you can insure. Check out Mint.com’s life insurance calculator for more coverage selections.

When you sign-up, don’t forget disability insurance. Like life insurance you can generally find low-cost options in your benefits package. If you can’t, look to reduce the price on an individual policy by delaying the period before you receive benefits – from three months to six. Brewer also recommends looking for a group discount through an alumni or professional group – she’s insured through the Financial Planning Association. Keep in mind, whatever Social Security disability benefits you receive will be subtracted from your payout, which is also subjected to taxes. That’s why maintaining a robust emergency fund is so vital.

Read next: The 3 Most Important Money Lessons My Dad Taught Me

MONEY Food & Drink

Should You Always Tip in Cash?

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Getty Images Wait staff always prefer cash tips, but there are times when you may want to charge it instead.

Even a cash tip is not guaranteed to land completely in the server’s pocket.

You have two options for tipping at a restaurant: tipping in cash or including the tip on your credit card. (Notice that there is no third option to not tip at all. Don’t be a cheapskate.) Is it better to tip with cash or with a card? That depends on the perspective involved.

From the viewpoint of the server or person being tipped, cash is generally preferred. That is not just because a less scrupulous server may skip reporting some cash tips as income and evade taxes. Merchants have to pay a small fee to the credit card company for each payment that is processed. Some restaurant owners deduct a portion of those fees from your server’s tip, reducing the amount that you intended to leave for them.

There is also a time lag associated with the tips based on credit cards. The restaurant manager/owner must check the receipts and determine how much cash your server is owed for the tips on their shift. Servers may have to wait for some time after their shift is over to receive their tips, which can be troublesome if your server needs to be somewhere else quickly after work for a family obligation or second job. In other cases, the tips are added onto the paycheck, which can cause a cash-flow problem for your server.

Even a cash tip is not guaranteed to land completely in the server’s pocket. Some restaurants pool the tips to distribute them among the other supporting staff (such as busboys). In that case, you really do not have any control over how much of your tip is directed toward your server.

Auto-gratuities that are added to larger bills are more complicated from the restaurant owner/server viewpoint, based on the rule starting in January 2014 that auto-gratuities are considered service charges instead of a tip. That puts them in the category of regular wages and the restaurant must report them for payroll tax withholding.

From your viewpoint as the customer, how you tip generally does not matter, except when you are tipping on a service related to business purposes. In that case, the gratuity can have reimbursement consequences for you and tax consequences for your employer. Most employers have relatively strict guidelines on expectations for tipping and how they expect it to be documented.

From your employer’s perspective, a tip is a deductible business expense, but problems can arise when the tip is disproportionate and/or non-documented. Generally, businesses prefer that tips be applied to credit cards so that they have a record of it, but most businesses have a means of accounting for cash tips in expense reports. If you keep the amount reasonable and follow your employer’s system, then all should be well.

While we have used a restaurant as an example, these same principles can be applied to hotels, transportation, or any other place where a credit card can be reasonably used for a service tip.

As the customer, you can help your server in one of two ways: either ask if cash tips are pooled and present all of your tips in cash so you can make sure that your server receives the amount you intended to tip, or add an extra few percent to a credit-based tip. If you have ever worked as a server or in a job based on tips, you will know how grateful your server will be that you took the time to make sure that he or she was well compensated for their work.

Read next: 5 Amazing Strategies to Eliminate Food Waste and Feed the Hungry

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MONEY consumer psychology

10 Lies Rich People Never Believe

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Giorgio Majno—Getty Images

Forget abut YOLO.

We are all guilty of telling ourselves little white lies on a daily basis. Anything from “One more slice of cake won’t make a difference,” to “There’s time to watch one more episode before bed.” However, some of the lies we tell ourselves about money, especially if we’re short on it, can be very harmful.

They are the lies that keep us in debt, and stop us from living the life we really want to live. Here are 10 of the biggest lies that struggling people tell themselves week after week — and that successful people never tell themselves.

1. “I Really Need It!”

We need to separate the want from the need. Do any of us really need the latest smartphone? Do we need to dine out every Friday night? Do we need a $40,000 wedding? (No one does.) Do we need new clothes? And if we do need new clothes, do they need to be brand new, or can they come from a thrift store?

We will convince ourselves, through a series of pep talks and excuses, that we really need to have something. But often, we just want it. People who are good with money will know the difference between what they need, and what they want, and if they cannot afford it, they won’t get it.

2. “Credit is FREE Money!”

No, it’s not. Credit is actually more expensive money, if you really want to analyze it. Almost all credit comes with an annual APR, so when you borrow money, be it on a credit card, a loan, or any other form of credit, you are entering into a contract to pay back the money you borrow plus interest. Some people think that by getting out a bunch of credit cards, they are helping themselves to a ton of free money. But those bills will have to be paid at some point, and the interest will be accumulating until it’s paid off. This also leads into another huge lie…

3. “I Can Only Afford to Pay the Minimum.”

Actually, none of us can really afford to pay only the minimum on credit cards and loans. The interest quickly racks up on any debt you incur, and by paying the minimum you are spending it almost entirely on paying off that monthly interest charge. That means very little, if any, of the money we pay back on a loan gets applied to the principal. For instance, if we have $5000 on a credit card with an 11.9% interest rate, and pay $100 a month on that card, it will take 70 months to pay it off. We will have paid almost $2000 in interest. By doubling that payment to $200 a month, it takes just 29 months, and we pay only $775 in interest.

4. “I’m Never Going to Have Any Money Anyway.”

Says who? There are many examples of people who came from nothing and made fortunes; Oprah Winfrey is perhaps the most famous example of that. If we continue to tell ourselves that we won’t be successful, or we are destined to be financially challenged, then it becomes a self-fulfilling prophecy. By thinking positive, we can at least start to get out of that rut and make opportunities for ourselves.

5. “I Have to Buy It; It’s on Sale.”

There are several ways to look at sales. They can be opportunities to save money, or even make money. By all means, we should shop the sales when we are looking for a specific item. However, buying something when it’s on sale just because it is on sale is a terrible way to waste money.

If we buy something, for instance a blender, for $60 because it is reduced by $20, we think we’ve saved money. But if we didn’t really need a new blender (remember the need vs. want argument) we haven’t saved $20 at all…we’ve spent $60. It can get even worse when we buy lots of sale items simply because we like the feeling we get of saving money. We cannot fall into that trap. Unless we really need something, or can see a way to buy and sell at a profit, we should all avoid those sales like the plague.

6. “Everyone Has a Car Payment.”

Ask around at work. Ask your friends, and family. You will find out that some people have small car payments, other have huge car payments, and some have no payments at all. The ones who don’t have a payment are smart. They either paid off their car in one lump sum, or made monthly payments until it was paid in full, and then kept the car. We all get tempted by the latest models, and as few of us can afford to drop $25,000 to $30,000 on a shiny new car, we opt for a monthly bill. But that monthly bill comes at a cost greater than money. It’s taking away from money we could be putting into a savings account, or spending on experiences like vacations or education.

7. “I’ve Earned It.”

“I worked really hard this week, I’ve earned this $5 cup of coffee.” “I worked an extra shift, I definitely earned this new outfit.” We are all guilty of this kind of thinking. We work hard, we feel like we earned the rewards that come from those endeavors. However, what are those little treats really costing us?

A $5 cup of coffee every day is around $150 a month. That’s $1800 every year. What could that money buy us, especially when we can make a decent cup of coffee at home for just pennies? What we have really earned is the chance to have a better life, and we’re cheating ourselves out of it by spending money on frivolous things just because they give us a few extra minutes of pleasure.

8. “It’s Only Money.”

That’s a little like saying “It’s only oxygen.” We need money to live (unless we have found a way to survive without it, which is rare to say the least). That kind of blasé attitude to money is what keeps poor people poor; rich people never think that way about money. It shows a complete lack of respect for the currency that we need to live on, and if we spend like there’s no tomorrow, guess what…tomorrow is going to suck. Money may not bring us happiness, but a lack of it can certainly make us very unhappy, and even unhealthy.

9. “I’m Not Gonna Live Forever.”

Add “You only live once (YOLO)” to that, and “Spend it while you’re young enough to enjoy it.” The problem with that kind of thinking is that the money runs out, the debt piles up, and we are committing ourselves to a future of worry, stress, and life without any kind of comfort. Humans are living longer lives. We may not live forever (yet) but we need to live like there’s a long future ahead of us, and save accordingly.

10. “Something Will Turn Up.”

Relying on luck to change our fortunes is foolhardy. Yes, something may very well turn up out of the blue. We may buy a lottery ticket and win millions. The chances of it happening are microscopic, but it could happen. We may also get a massive promotion at work, out of the blue. However, most of the time we create our own luck. We need to make sure that we’re working towards a way to grasp opportunities when they present themselves, or the things that “turn up” could include unexpected medical bills, unemployment, or bankruptcy.

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