#141: "I'll get around to rolling over my 401k ... next week." "Eventually I'll switch to a cheaper insurance plan." "I really should move my portfolio into lower-fee funds." "Yeah, yeah, I know I should create an estate plan. I'll do it later." ____ We know how to improve our financial lives. We know what steps we ought to take. I'm betting that everyone reading this can name at least one action, big or small, that you could take to improve your net worth. But we don't follow through. Why not? Why do we procrastinate? Why do we ignore the important, in favor of the urgent or the more-pleasant? Why do we act against our self-interests? Why is there a gap between our intentions and our actions? More importantly, how can we bridge this gap? How can we align our knowledge and intention with our behavior? Dr. Stephen Wendel is a behavioral economist and the head of behavioral science at Morningstar, an independent investment research firm. He joins us on the Afford Anything podcast to answer these questions. Here are a few tactics he shares: #1: Automate Set up systems that save you from yourself. #2: Create mental accounts Give every dollar a job. Earmark dollars for specific purposes, so that you don't view your money as commingled in a giant bucket that you can raid. Once you start thinking of piles of money as "my emergency fund" or "my kid's college fund," you'll be less likely to spend it on champagne and luxury hotels. #3: Imagine vivid scenes Our minds are predisposed to prioritize the vivid over the subtle, which is one reason why we suffer from "present bias" -- the tendency to only think about the present, often at the expense of the future. (For example, "I feel like sitting on the couch right now" takes priority over "If I workout, I'll feel better in the future.") In order to combat this, create vivid scenes in your mind that imagine the future in great detail. #4: Create artificial hindsight Imagine a future version of yourself, and from that perspective, look back in hindsight at yourself today. What will Future You regret doing, or regret not having done? This technique is called "prospective hindsight," and it allows you to anticipate the thoughts and emotions of your future self. #5: Simplify If you find yourself drowning in a sea of complex financial decisions, you might lose confidence in your ability to make choices, and therefore not take any action whatsoever. Reduce complexity by making moves that are 'good enough,' rather than perfect. Simplify in order to take action. Dr. Wendel shares more tactics and insights in this episode. Tune in for a deep-dive! Learn more about your ad choices. Visit podcastchoices.com/adchoices

#139: Five years ago, at age 29, Kim E. started her first professional, salaried full-time job, working as a firefighter for the City of Austin, Texas. She received a starting salary of $42,000. Today, five years later, she has saved: - one year's salary ($40,000) in an emergency fund - one year's salary ($42,000) in a workplace retirement fund - more than half a year's salary ($27,500) in a Roth IRA She also paid off her student loans ($10,000), paid off her car loan (roughly around $16,000-ish), and contributed to an H.S.A. account ($6,000, half of which came from an employer match.) Oh yeah, and she also bought and renovated a rental property. Translation? Kim has saved (or repaid debt of) $141,500 within five years, as a firefighter with a starting salary of $42,000, excluding the additional money she's invested into her rental. **She's saved more than 3x her starting salary, within her first five years on the job.** And she's done this while earning a middle-class public service salary in an expensive city. Wowza. How is Kim saving half of her firefighter salary? And before she became a firefighter, what other frugal tactics did she develop? How did she put herself through four years of college with less than $10,000 in debt? How did she travel before college, when she used to earn $10 per hour? Where does her resourcefulness and motivation come from? And what wisdom can she share with others? Find out in today's episode. Learn more about your ad choices. Visit podcastchoices.com/adchoices