Ask Ariely: On Simple Savings, Better Bonuses, and Revised Resolutions

February 1, 2020 BY Dan Ariely

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.


Dear Dan,

My partner and I are students, and we have very different approaches to dealing with money. My policy is to spend less than I earn and invest my savings for the long term. But my partner feels that since we will both be earning more money after we graduate, we should spend freely now and enjoy the moment. Is there any way to avoid fighting about this issue?


The bad news is that our preferences about spending and saving can be difficult to change. That’s why most divorced couples name finances as one of the major reasons for their split. The best way to avoid that fate is to recognize that you and your partner can’t change each other. Instead, you should minimize areas of conflict.

Try setting up a joint bank account in which you can both deposit your paychecks. Use that account to pay shared expenses such as rent and utilities. In addition, you should each have individual accounts for discretionary spending, into which you can transfer a fixed amount from your joint account every month. That money can be used for spending or saving as you see fit. You may still disagree, but this way you’ll only be arguing about the smaller amounts in your individual accounts, which limits the size of the problem. And remember, the goal of money is to buy happiness. If you keep fighting about it, what’s the point?


Dear Dan,

I work for a tech company as a software engineer. Our bonuses are tied to quarterly evaluations, which means that managers are much more likely to reward short-term gains than ideas that take a year to generate results. Since the introduction of this bonus structure, I’ve been concentrating much more on short-term projects with visible results. Am I really doing the right thing for the company, or am I just gaming the system to get paid more?


There’s no question about it: Your strategy is designed to make more money for you personally, but it will hurt the company in the long term. When the company created this bonus structure, they probably thought it made sense, because short-term results are easier to measure. But it is counterproductive if employees become less motivated to take on riskier, more ambitious projects with potentially higher payoffs. It’s hard to ignore a bad incentive structure, so if I were you I would try to convince management to change it and measure the things that matter, even if they are complex or hard to quantify.


Hi, Dan.

Do you think New Year’s resolutions have any value, given that most people don’t keep them?


I do, but they’re just a start. To get a resolution to stick, we need to make the desired behavior automatic. For instance, if you want to exercise more, build a very simple habit: Every Tuesday at 5 p.m., go to a group exercise class after work. Ideally it will be something you find enjoyable and rewarding, so that the habit is more likely to stick. The more you repeat a behavior in the same context at the same time, the more automatic it will become and the less you’ll have to rely on willpower. For a good introduction to the research on this topic, I recommend Wendy Wood’s recent book, “Good Habits, Bad Habits: The Science of Making Positive Changes that Stick.”

See the original article in the Wall Street Journal.