When we begin working with a new client at Mullooly Asset Management, the first step in our financial planning process is compiling a household statement of cash flow and balance sheet. Cash flow impacts so many other areas of personal finance and investing that, without it, we’d be driving blind. As an exercise, I thought…
mental accounting
Different Dollars, Different Time Horizons
We build and consume retirement savings gradually. We gradually trade our human capital for pay. We gradually invest a portion of that pay. And, in the future, we gradually use what we accumulate to support ourselves as our human capital dwindles. This is the life-cycle of the average retirement account, which is all intuitive when…
Well, Technically
Do you remember learning about fungibility in Econ 101? It’s the idea that a good or asset can be interchanged with another similar good or asset. The part we didn’t learn about is when this is technically true, but pragmatically irrelevant. Enter behavioral economics. One of the first behavioral economics ideas I understood was the…