This article explores how friction, often seen as an obstacle, can be used to improve financial decision-making. It highlights the convenience trap, suggesting strategies like uninstalling shopping apps and disabling social media notifications to reduce impulsive spending. Conversely, the article advocates for 'nudges' that simplify saving and investing by automating processes and setting reminders.
Hand brakes were created to prevent the car from crashing with another car or object. Non-slip slippers or shoes are designed to keep people, especially the elderly and pregnant women, safe from wet slippery floors. Simply put, friction slows down motion and minimizes unintended accidents.
For example, if you want to decrease your unexpected and impulsive expenditures, you will need to create several friction points to keep you from exhausting your financial resources.Your initial course of action will be to eliminate the triggers. You need to make it harder for yourself to spend money.
Never save credit card or debit card information on any website so that you will always have to deal with the inconvenience of entering your information whenever the temptation to spend arises. To develop the habit, you need to minimize the friction points or the obstacles and implement another potent behavioral economics concept known as “nudge.”
The inconvenience of long queues at the counter, traffic, emergencies, and impulsive shopping will make it more difficult for you to keep to your savings target so it’s best to automate it. You won’t forget it once you’ve set it.
Friction Behavioral Economics Savings Investing Financial Goals
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