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Why Personal Finance Isn't Personal for Mint

Why Personal Finance Isn't Personal for Mint

Expert Interview with Luke Landes

Since 2003, Luke Landes has been writing about personal finance and ensuring your money is wisely spent. Luke took a moment away from his site, Consumerism Commentary, to speak with us about caring for your money and why, surprisingly, personal finance isn't as "personal" as we think.

What are some common misconceptions you see about finance?

"Personal finance is personal!" Here's an interesting conundrum. One of the reasons given for an apparent lack of good financial decision-making among the public is that money-related decisions are more about emotion than mathematics. We all learn basic addition and subtraction when we're young. People with uncontrollable amounts of debt have no lack of understanding of arithmetic; this result is due to something other than the question whether a bank balance greater than zero is better than one less than zero.

Human beings simply make decisions with emotions rather than with logic. When financial literacy tries to solve the problem through education, it's often focusing on the wrong things.

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But here's where the constant "personal finance is personal!" drumbeat leads to a misconception. Yes, humans are emotionally-driven beings, and good financial decision-making requires more than a textbook understanding of the net worth equation, for example. This mantra is often used as an excuse to ignore good financial advice, to fully submit to emotional decision-making, and to rationalize bad ideas. It leads to the idea that while some advice is good for "most people," I am above average. A special set of rules applies to me. Chances are good that you and I both fit in well with "advice for averages."

How do you balance a good saving strategy and not be too penny-pinching? What's a sign you should loosen up a bit?

There's more to life than money. Financial writers don't want to believe that; their livelihood is based on framing all of life's interesting bits from a financial perspective. I get that. To a hammer, everything looks like a nail, and even when I write, I look for an angle that reflects my audience's expectations to read about finances. It's possible to take any good idea too far. If your penny-pinching is hurting other people, if you're making unnecessary sacrifices, or if the return you get for your time isn't high enough - and that return will decrease as you become more financially savvy - it's time to reevaluate your choices.

What are some good saving strategies you recommend for those dealing with debt?



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