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I’ve written extensively about taking control of your finances. One aspect of the ability to succeed with your financial goals is making active, thoughtful decisions pertaining to your use of money. Uptal Dholakia is a professor of management at Rice University in Houston, and he is currently conducting research pertaining to self-control and decision making as they pertain to personal finance as well as other personal issues.

I’ve always been excited to participate in academic research; I was a frequent subject for Princeton University’s cognitive psychology department when I was much younger, and I continued through college by participating in occasional research studies conducted by graduate students at my own university. In fact, when I attended a psychology class my sophomore year and was considering the pursuit of a minor in psychology, participation in graduate research studies was mandatory. Regardless of the requirement, I enjoyed it.

Zener CardsProfessor Dholakia is inviting Consumerism Commentary readers to participate in this study. In order to participate, all that is required is to answer questions on a web-based survey.

I completed the survey last night, and it took less than ten minutes to complete. The questions were not difficult, but they did make me think about my decision-making process and how I allow myself to succumb to impulse decisions. There are some questions about demographics at the end of the survey, but the information will be held confidential and reported only in aggregate.

The professor has agreed to share the results of the research with Consumerism Commentary, so once the analysis is complete, you can expect an article discussing the findings published here.

Please help further research regarding the psychology of personal finance by completing the survey here. No electrodes need to be connected to your body and you won’t need to receive any electric shocks.

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There’s a chance you could become a multi-millionaire after repeatedly slamming your head into other people and suffering through the resulting mini-concussions and minor brain damage, but not everyone can be a professional football player in the NFL. There’s a safer and less harmful path toward financial independence.

Cognitive ability is an important part of your human capital, and your human capital measures, among other things, how likely you’ll be able to support yourself financially, particularly through difficult economic times. Cognitive ability is important because many jobs requiring intricate skills and the best careers that offer opportunities for advancement require the ability to learn and adapt, and that’s the core of cognition.

The ability for the brain to process information changes throughout one’s lifetime, and without stimulation, cognitive ability can decline. When companies like Google or SAS ask puzzling interview questions, they’re testing, among other things, cognitive ability. To be hired as a software engineer, you would need to show that you have a strong command of whatever primary programming language is popular at the time, but in an industry that changes so quickly, strong cognitive ability will show that you can learn and adapt to the changing environment.

Rubik's CubeThe key is instilling cognitive ability in children at an early enough age. As we get older, we can continue to refine cognitive ability, but only to a small extent. These tactics may no longer work for me; the best adults can generally do to keep cognitive skills sharp is to get enough sleep and exercise, and eat nutritious food.

If you’re interested in helping your child prepare for a life full of challenges, there are some tactics you can employ.

Learning a new language

As a child, I enjoyed learning languages. I never became fluent in anything other than English, but I enjoyed the process of learning the rules. As a kid, I was fascinated by languages, and spent time learning a little bit of as many as possible. Like many kids, I learned a little Spanish from Sesame Street. I learned Hebrew and tried to teach myself Yiddish. I studied Latin in middle school, was taken out of usual classes to study Greek independently, and took five years of German. I learned programming languages like BASIC, Pascal, lisp, and C. And as a younger kid, I dabbled with creating my own languages and codes.

Music and mathematics have features in common with languages, as well. Music, particularly learning to play an instrument instead of just listening to Mozart, has been shown to improve cognitive ability.

As an adult, learning a new language or a musical instrument is a time-consuming task. There are programs that help frequent travelers learn languages quickly, but you could get a bigger cognitive benefit by learning a language through a more academic curriculum or through immersion. Rather than focusing on key phrases that help you get by in a foreign land, incorporating a new language into the way you think can help keep your brain active. On the other hand, young children, even those learning their first language or languages, can often learn multiple languages concurrently without being confused. Language skills not only improve cognitive ability, but they can make someone a more marketable employee around the world or increase the chance of international success in their own businesses.

Completing puzzles

Elementary school is a great time to focus on solving puzzles whose solutions require thinking “outside the box.” I seem to remember this being called “lateral thinking” when I was younger, but I don’t know if that term is widely used today. These are the types of puzzles that stymie job applicants at companies like Google. But puzzle solving as an adult won’t have the same impact as puzzle solving when the brain is at its most impressionable.

  • Logic puzzles are kind of like the game Clue. You often have two or more dimensions to work with, and the goal is to pair each of the dimensions together based on a limited number of clues. A grid helps eliminate incorrect pairings to discover what’s correct. The more dimensions included in the puzzle, the more brain power necessary to solve the puzzle.
  • For a child, a Rubik’s Cube can be an engaging puzzle. While the answer now comes packaged with the toy, and there are numerous Youtube videos describing how to solve the puzzle in about twenty moves, the cognitive challenge is in working to find patterns of movement that move closer to the result.
  • Text adventure games open up a child’s mind to being able to control their environment. Video games have changed since I was a kid, but I enjoyed the early text adventure computer games like Scott Adams’ Adventureland. (Classic game lovers can play Adventureland here.)

Reading and writing

Reading and writing help develop important cognitive skills focused on processing information the same way they’ll need to make sense of problems as adults. Writing, particularly creative writing, improves the command of language and can help children find clarity when expressing their ideas. Writing is a skill that will easily set someone apart from the competition, as might be necessary in tough job markets. I’ve personally seen atrocious written communication among co-workers throughout the many jobs I’ve had. I will never say I’m a great writer, but these skills are lacking in my former non-profit and corporate environments.

When I compose a well-worded communication, the supervisors shouldn’t be surprised. Every employee with a college education should be able to express himself or herself somewhat eloquently.

These cognitive skills nurtured at an early age can help prepare children for financial success in life. The best careers need smart and flexible employees to take on unforeseen challenges. People often predict what the hottest careers may be one generation from now, but the specific opportunities are irrelevant if children are prepared today to handle any problem that presents itself.

What did you do as a child to improve your cognitive ability? If you have children, how are you helping them prepare for the future?

Photo: Don Wright

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For almost as long as I’ve been living without a human roommate, I’ve enjoyed the company of my cat, Rupert. I adopted Rupert from my friend who determined his newborn daughter was allergic to cats. He had already owned Rupert for a long time, and I knew I’d be the cat’s new owner for the second half of his life.

Rupert was fifteen or sixteen years old when I brought him to the veterinarian to have him put to sleep this weekend. His quality of life had been worsening over the last year, though trips to the vet didn’t indicate why he was unhappy or having health problems, nor could the vet offer any suggestions to help. His suffering seemed to increase in the past weeks, and I had to make the difficult decision.

For most of my years with Rupert, I commuted to my place of work every weekday, and I knew that he would be waiting for me when I returned home. In recent months, as I’ve been working from home, Rupert kept me company when he wasn’t sleeping during the day. There were times he was a pest, but overall, he was a very sweet cat who was always happy to provide companionship. I may find a new cat sometime in the future, but not until I can settle other aspects of my life.

Here are some articles from around the web that piqued my interest lately. Read the full article →

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This is a guest article by Phil Cioppa of Arbol Financial Strategies, LLC. Phil has over 10 years of financial service experience and specializes in asset management strategies, insurance planning and taxation issues. A budget is an important part of any financial plan, and right now is the best time to take another look at yours.

Do you feel like your dollars don’t stretch as far as they used to? No, it is not your imagination. They don’t, because we are experiencing some of the most difficult economic times since the gas lines of the 1970s and the Great Depression in the late 1920s and early 1930s.

What does this mean for you? It means that it’s time to revisit your household budget to make sure that you are living within your means, that you are not wasting your hard-earned dollars on items you don’t need, and that you are setting money aside for what is really important.

What is really important? No, it’s not having the latest high tech gadget, a flashy new car, or more clothes to hang in your closet. It’s building and maintaining an adequate financial safety net for yourself so that you have the money you need to pay for setbacks and emergencies. For example, you lose your job, your employer decides not to continue paying for your health insurance, your car dies and you need to replace it, your child has an unexpected medical problem, your home needs an expensive repair, and so on. Without an adequate safety net, you may have to use credit cards to fund the unexpected, which could be devastating to your finances.

Saving for retirement is also really important. No matter how far away you are from retirement, if you don’t begin planning for it now, your inaction will come back to haunt you. No matter what –- put money aside for the future! When that future becomes “now,” you will be glad you did.

I know that doing all of this may sound like a tall order, but it’s non-negotiable. To start, re-evaluate your financial priorities, study your budget to figure out how your spending and your priorities line up, and then reduce your spending as necessary so that you can begin building a financial safety net as well as a retirement fund. And yes, doing this may require some sacrifice on your part.

If you have to spend less, examine your essential expenses, like food and other day-to-day costs of living. What can you reduce? Also look at the fat in your budget –- the stuff that you enjoy or think is nice to have, but that you really don’t need. What are you willing to give up?

Here are just a few of the kinds of questions you should ask yourself as you rework your budget:

  • Is your current cell phone plan truly the best deal for you?
  • Can you save money by bundling your phone, Internet and cable service? You’ll usually find that new account holders get the best deals so you may want to change providers.
  • Have you explored whether you could purchase your electricity or gas from a less expensive source, assuming those services are deregulated in your state?
  • Do you really need all of the TV channels you are paying for? If you changed to a cheaper package, would you miss the channels you eliminated?
  • Are you paying too much for your insurance? Ask your insurance broker to evaluate your insurance needs and explore whether you could save by consolidating all of your insurance with one company.
  • What about your vehicles? Can you get rid of one or them? And, how often do you use the motorcycle or boat you pay to insure?
  • How much are you spending each week on restaurant meals, happy hours, and coffee drinks? If you take the time to add up those expenses, you may be surprised at your final total. Take the money you are spending on such nonessentials and use it to pay off your debt faster, or to increase the amount that you save each month.
  • If you’ve been dropping thousands on vacations away, take vacations closer to home or even consider a vacation at home. Given rising airfares, you could save a bundle.
  • Refinance your home. With interest rates at all time lows, you could realize a substantial savings by getting a new mortgage loan and paying off your current one.

Nobody likes to change their lifestyle, but nobody likes to be broke either or to come up short when it’s time to retire! The key to surviving and even flourishing in a down economy is to be realistic about your spending, to decide what your financial priorities and needs really are, to give up some of your creature comforts if necessary, and to save, save, save. It’s essential if you want more money in your pocket for today and for tomorrow.

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Frugal Employers Will Lose Their Talent

by Flexo
Paycheck

During the recession, my employer, a firm in the financial industry, eliminated raises for employees at the Vice President level and above for one year. The company, although continuing to perform well compared to its peers, cut back bonuses and other benefits. It’s easy for employers to demand higher productivity for less compensation when the ... Continue reading this article…

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How to Solve the Financial Literacy Problem

by Flexo
Kid with money

Opinions are generally clear about why such a large percentage of the American population winds up in financial jeopardy. There’s no formalized way to learn how to use money properly and with the best results; most people learn by experience. It would save a lot of headaches if we could somehow warn people in advance ... Continue reading this article…

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Choosing a Career Path By Chasing Hot Jobs

by Flexo
Oil field pipes

A recent article in Fortune Magazine predicts that one of the hottest jobs ten years from now will be data scientist. If this prediction is true, parents of teenagers in their first year of high school and their parents might consider encouraging their kids to develop the skills necessary to be in high demand by ... Continue reading this article…

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How to Love Cooking

by Forest
Toast

This is a guest post by Forest from Frugal Zeitgeist. Forest writes about frugality, finance, minimalism and lifestyle. In this article, Forest shares his experiences in the kitchen. Cooking great meals is a great way to save money and stay healthy, but it’s a skill that I haven’t developed for myself. Passion can boost motivation, ... Continue reading this article…

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