Spending should be painful, not painless

WASHINGTON, D.C. » People often ask me what’s the best budgeting tool to help them better track and control their spending.

I always pause, hoping the person is ready for an answer that’s different than what he or she asked.

There are a number of websites and mobile apps that can turn you into a budgeting wizard, doing everything from downloading your banking information and allowing you to create impressive charts to alerting you when you’ve blown past your self-imposed spending limits.

But after years of working one-on-one with financially challenged people, here’s what I’ve found: The source of their money troubles isn’t their lack of a cool budgeting app. And most of the time it has nothing to do with their lack of funds.

The truth is that many people fall into a crisis because they are bad at making good financial decisions. And all of the recent advances in technology may actually be making it easier to stumble, argue Dan Ariely and Jeff Kreisler in “Dollars and Sense: How We Misthink Money and How to Spend Smarter.”

The authors write: “From Bitcoin to Apple Pay, retinal scanners, Amazon preferences, and drone delivery, more and more modern systems are designed to make us spend more, more easily and more often. We are in an environment that is ever more hostile to making thoughtful, well-reasoned, rational decisions. And because of these modern tools, it’s only going to get more difficult for us to make choices that serve our long-term interests.” Boom! Drop the mic. The solution to your money troubles is to think more. You’ve got to delve deeper into the mind games being played against you and guard against the things you tell yourself that lead to money mistakes and your financial mismanagement.

If you want to get better at making good financial decisions, read “Dollars and Sense,” which is the Color of Money pick for this month.

The Color Of Money