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The Financial Hawthorne Effect

The Hawthorne Effect (also known as the Observer Effect), is something I have observed in my life more than once. The main thing I have seen is that when I start observing and taking close note of what I am doing, financially, I change how I act with money, thus I end up changing my lifestyle, but then having the wrong perspective on my financial life.

The specific example I can give, is when I decide that I am spending too much money (usually happens at least 3 times a year) and I want to see where the money is going. I  start watching what I am spending, by becoming (even more) anal about recording expenditures in Quicken (my normal method for watching spending).

Hawthorne Effect
The Hawthorne Effect (I always thought this happened)

Typically when I start noting my financial life I end up:

  1. Not buying lunch at the cafeteria at work, or limiting it to 1 or 2 meals a week, and eating more left overs for lunch
  2. Attempt to have “no spending days” where at the end of the day I have the same amount of money in my pocket as when I started, but that becomes a bit of a cheat with Interac and Credit Cards.
  3. Doing weekly and monthly reports to look at where the spending is happening and then “discussing” that with Mrs. C8j (OK, so it ends up in a fight because inevitably in the discussion I use the “What were YOU buying at Store Z?” phrase).

Doing all of this causes me to alter my spending habits, thus the data I am collecting is at best skewed and at worse, incorrect.

The best way I can do a real study on my spending habits is by looking at past data (in Quicken) and act on that data, however, when I do try to watch myself financially, I end up acting like I am supposed to act, so maybe that side-effect makes the whole exercise well worth while ?

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Talking about Money on Twitter this Week

I have about 2500 Twitter followers now, and my feed is alive with interesting financial stories, so here are a few of the ones I enjoyed reading this week.

Glad to see that the Bank of Canada is celebrating the Queen’s record-breaking reign (with a more secure bill):

The Economist (unfortunately) gets this one very right (also true in Canada):

How do you work around the seemingly definitive statement “first time home buyer“? Just ask Preet:

I did not realize that the CRA offered this service, but it is well worth checking out in my estimation:

The greatest retirement tweet of the year (if not kind of NSFW) :

Kerry Taylor gives us the narrowest house in Toronto, which still costs a bloody fortune

Teach, your children well, about money that is

In case you thought all those fun games on your iPad are free…

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To help you enjoy this long weekend (the last of the summer of 2015 I might add), here are some of the most interesting tweets of the past week in personal finance (and other things too).

Has Preet created a new Economics buzzword for the Money Talking Heads ?

Another interesting investment profile from Larry MacDonald

Another big win for cord cutters (in the USA at least) all NFL games on CBS will be streamed

Any post that has Louis CK in it, has got to be good

This should be interesting, and I will be there too

I really don’t know how Scotiabank can justify this one, amazing bit of Banks Behaving Badly

Is it time to rebalance? Maybe, if you need to rebalance, now would be a good time

Who else could drive around London sitting on a chair, on a Leyland Mini? Mr. Bean of course! 25 years ago? Really?!?!

And to finish off a possible Election 2015 preview on youtube, I will be voting Very Silly if it is on the ballot

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Another round of some of the finest money tweets of the week, hope you enjoy

Why is it that the Chinese stock market and economy confuses my simple mind?

Not sure I completely agree with Mr. Bernstein, but I think I understand his sentiments:

Some very sound advice from our friends at USA Today:

Finally this is my favorite tweet of my own this week, nice graphic:

Not sure the Bank of Canada is only concerned about commodities, but you never know, do you?

High praise when someone calls it the best investing article:

One more from Facebook, which is actually a linked in link, if you like pointers to pointers:

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The 10 Minute Rule with Money

One of the better “time management” tricks I have run in to over the years, has been the 10 minute rule, where my interpretation of it is:

If something takes 10 minutes or less to get done, do that first, and do the other stuff afterwards

It has been useful for me, as I have a tendency to get “stuck” and be unable to select any task to complete, but now, I simply find the little tasks and start doing those (which then gets me going to work on larger tasks), but how can we carry out this in terms of personal finance?

Clock
How Long Can 10 Minutes Be ?

I guess the question is, what is a 600 second task financially ?

  • Updating your books (in Excel, Quicken, or whatever) should take less than 10 minutes, if you are doing it regularly.
  • Pay a bill as it arrives. Michael James commented on my Too Many Bill delivery Mechanisms posts that this is how he makes sure all bills get paid, pay them when they show up.
  • Call and cancel an unused credit card ? OK this one most likely might take a lot longer, but you never know, it might take less than 10 minutes.
  • Run a backup of your financial records, and/or your computer, you can never be too safe in that area (also maybe start-up an anti-virus check, or an OS update)
  • Do some shredding. You must have some old records lying around that need to be destroyed, do 1o minutes of shredding.
  • Go in your basement, find 2 things you know you will never use and either donate it, or throw it out, do that once a day for a month and  you might be surprised.
  • Ride a bike, go for a walk or do 10 minutes of stair  climbing, to plan for your retirement. (10 minutes of staring is not a good use of your time however).

Just some simple things to try to do, to get “unstuck” and start doing something. Are there other 10 minute financial tasks I have missed ?

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