Ask Ariely: On Bargain Glow, Mindless Savings, and Rigid Resolutions

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

Why do I feel so good when I buy something that is on discount—or, better yet, on sale?

—Sarah 

Happiness is often a relative judgment about the distance between where we are and where we could have been. If we think that something could have been better, we feel bad, and if we think that something could have been worse, we feel good by comparison. So when we buy something at a great discount, it is easy to compare our situation to the alternative scenario of paying full price—and we feel fantastic.
The problem, of course, is that this type of relative comparison and its attendant happiness don’t linger in our minds. Once we start using our bargain purchase, we don’t think much about its price, so the relative happiness from the discount disappears.
To keep that bargain glow, you could remind yourself of the pittance you paid and the full price that you dodged, or you could realize that the joy of buying goods on sale has a short shelf life.

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Dear Dan,

As 2015 comes to an end, I want to start saving for my retirement more seriously. Could any tricks help me to move the saving needle?

—Teo 

Usually, saving is what we have left over after we finish spending—and because life is full of temptations, we often spend more and save less. One of the best responses is to eliminate the temptation to overspend.
Think of your 401(k). In a world in which people always make the best decisions, we’d sit down at the end of the month with our bank statement, see how much cash we have left and put as much as possible in a long-term savings account. In the real world, we’d probably save even less than we do now. So 401(k) plans take the money right out of our salaries, forcing us to manage with the leftovers. That isn’t ideal, but at least it gets us to save something.
For another example of the power of mindless savings, look to the realm of personal finance: The key to growing your money turns out to be putting it in a decent fund and forgetting about it. A Fidelity Investments study showed that the best long-term savers are people who forgot that they had a savings account. (Dead people with saving accounts have even better stamina.)
My recommendation: Try to think once about savings—the start of the year is a fine time for this—and set up automatic transfers that will serve you in the long term.

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Dear Dan,

What kinds of New Year’s resolutions are we most likely to keep?

—Elizabeth 

Probably vows like, “Drink more and better wine.” More seriously, the resolutions that are most likely to work guard us from feeling like failures. When we set up a rigid goal and miss, we are likely to tell ourselves, “I failed, so what the hell—now I can go wild.” On the other hand, when a single failure is just a minor disappointment rather than a badge of shame, we can dig in and keep trying. So this year, plan your resolutions with some appreciation of the likelihood that you’ll occasionally fall short.

See the original article in the Wall Street Journal here.