Two Crazy People Sharing One Body

Some people think that they are two people. They believe that they suffer from a form of split personality, two individuals with differing tastes and Siamese Twins inclinations that awkwardly share the same body and, more to the point, the same bank account.

It is an interesting, but which I mean amusing, theory. It is not that I do not think that there really are folks, even millions of them, who have mental health issues such as bipolar disorder, which could be trivialized as two versions of the same person sharing one body. Others have substance abuse problems that cause an irresistible need to ingest certain chemicals.

But the people I am thinking of do not have such problems. They have nothing more profound than an inability to save as much of their income as they think they ought to. This they ascribe to mental illness.

Of course, they don’t call it that. In fact, they don’t call it anything at all, merely acting as if they had two or more personalities, and recommending such behavior to others, without reflection on the implications. Wise Bread recently ran a typical example of this line of thinking from PT Money, How to Create Barriers to Your Savings.

The gist of the post is that if you want to save you need to find a way to prevent yourself from having access to your own savings. Good You should put money into a 401k so that Bad You cannot spend it so easily.

Despite the implied craziness, this is relatively common personal finance advice. David Bach developed an entire series of books from it. And nowhere in this literature have I found either an acknowledgement of the assumption of craziness or anything like a warning that this is strong medicine for the few who need it.

This lack of reflection on what is going on isn’t helping any. Not being able to save what you think you ought to is a real problem and, I infer, a relatively common one. People experiencing it should address it directly and rationally. Only if that fails should they resort to drastic measures such as hiding their own money from themselves.

Much of the appeal of “making it automatic” is, after all, that you do not need to address the issue. You do not need to think about it at all. Just arrange to have a portion of your income sequestered so that Bad You cannot get his grubby hands on it and Good You will live happily ever after.

It is probably a better idea for the two of you, Good and Bad, to sit down and have a serious and thoughtful discussion. For example, and I mean this only as a reasonable possibility, it could turn out that Good You is the crazy one.

I believe that many people, and I am thinking particularly of younger ones, subscribe to a belief that they should save an arbitrary percentage of their income, such as 10%. This they consider to be virtuous and good for them, like eating right and getting enough exercise.

The problem is that the percent of income to savings target was likely not all that thoughtfully derived. It was probably selected arbitrarily or taken from some personal finance guru. (Has anybody else noticed that personal finance writers always recommend numbers like 10% or 15%? You would think that a figure that had any science behind it at all would be unlikely to be so round.)

It could be, and again I throw this out only as a possibility to be allowed for, that when 25-year-old Bad You breaks open the piggy bank to buy an iPhone or spend a weekend at the beach he is being perfectly rational. It could be that it is Good You’s plan to save 10% of income out of some general principle that is misguided and crazy.

My largely unscientific opinion, based on too much time spent in the personal finance world, is that although younger Americans probably save at about the rate they should, they tend to believe that they should save more than they do. This is due to the collision of an abstract and not well thought through goal with practical reality.

Life in your 20s and 30s is expensive. Lots of stuff to acquire and kids to raise. And yet income does not peak until your 40s and 50s, when you’ve already got one of everything and the kids have left home.

That does not mean I recommend no saving until you turn 40 and then X% from there on. Everybody is different. Personally, my income has taken a precipitous drop in my 40s. Each person must establish their own goals and work out how they will get there.

If you must think of yourself as a Good You cohabitating with a Bad You, try and listen to what Bad You has to say. It could be that he, and you, are not so crazy after all.


  • By Dan, July 27, 2010 @ 12:12 pm

    Personal finance gurus recommend round numbers as a percentage of savings because they’re meant as guidelines, just like exercising for 30 minutes a day. It’s quick, easy to follow information for people who don’t have the time or inclination to get into the science of it.

    Tell most people that if they save 15% they have a good chance of a financially stable retirement and there’s a decent chance they’ll do it – or at least make an effort to work toward it. Tell them they have to spend hours thinking about what their lives might be like 40 years from now and potentially hours more doing rigorous calculations to arrive at their “number” – and THEN try to map out how best to arrive at that number through a combination of percentage of income saved plus a bewildering array of investment opportunities, and they will crawl into a fetal position and not save anything. The elephant is too big to eat.

    General advice like “save 15% of your income” is the experts’ attempt to carve up that elephant into bite-size morsels.

  • By Lance, July 27, 2010 @ 12:25 pm

    “Life in your 20s and 30s is expensive. Lots of stuff to acquire and kids to raise.”

    Much as I like this post, I am somewhat amused that you hit upon one of my own personal finance pet peeves: The assumption that everybody has kids and does so in their 20s and 30s. About one in five American women above forty has never had a kid (I imagine the figure must be similar for men, although that’s obviously a lot harder to track). It’s a 20% of the population almost completely invisible in the PF world. I can’t count how many posts on wisebread et. al. I’ve seen that phrase kids as a question of “when” rather than “if.”

  • By Dan, July 27, 2010 @ 12:36 pm

    Lance, I wouldn’t say people without children are invisible. But most people have them so people write toward that audience.

    Besides, how hard is it to tweak the advice written for people with kids? Would it not be more or less the same, minus the advice about how to save for college and juggle the many competing financial priorities of one’s 30s and 40s?

  • By Anna, July 27, 2010 @ 1:41 pm

    If you are w/o kids or are unmarried, then your advice on finding ways to save means next-to-nothing. Just stop spending on yourself…

  • By Neil, July 27, 2010 @ 1:42 pm

    Meh. I suspect that most people who have serious financial trouble have it because they lack impulse control. I would suggest that breaking the piggy bank to buy an iphone is a great example of that, because it’s highly unlikely that that iphone will improve your quality of life sufficiently to justify its cost. Failing to meet an arbitrary goal because you live in a nice house, or went on a nice vacation is a different story.

    And impulsiveness pretty typical of people who are seeking out mainstream PF advice. They come looking such things because they find that they never have the money to buy the things they really want. Saving isn’t just about retirement…often it’s about a new couch or a larger home.

    Adding barriers to a persons impulsiveness is a perfectly reasonable approach, I would think. Some problems need to be faced and dealt with. For others, there are just control strategies. Alcoholics understand this, and they continue to go to meetings and describe themselves as alcoholics even if they’ve controlled the urge for decades. Spendaholics have a similar problem, and it’s not unreasonable that mainstream PF advice might address this very common problem.

    It’s not right for everyone. Certainly, I can move my savings around with a few clicks of a mouse button, and still manage to save very close to my goals. But the mass market isn’t necessarily the same thing.

  • By Boston Steve, July 27, 2010 @ 1:59 pm

    Well there can be a sort of Jekyll and Hyde thing going on….there’s a lot of people who save, save, save and then splurge on something, like people who save their pennies all year long and then go to vegas and bet the house….

    Also there is a strange human characteristic of valuing money differently depending on where is comes from or where it is, like not wanting to break a $ 100 bill for a small purchase or valuing money in the bank already as different than money in your wallet. Or the fact that people generally charge an average of 30 percent more when they use a credit card instead of cash.

    Let’s face it, people are often times irrational and if it takes hiding money from yourself or tricking yourself into saving, well I say do it, it’s better than not saving. Hopefuly once you do have some money you’ll smarten up and become rational.

  • By Lance, July 27, 2010 @ 4:33 pm

    Okay, previous post was a bit more cranky than I intended. Apologies.

    But in addition to the assumption being a bit grating, there are separate issues for the childless that are rarely discussed. This article from Kiplinger is a rare exception and it’s the tip of the proverbial iceberg:

  • By jim, July 27, 2010 @ 5:00 pm

    Lance, I can understand your pet peeve. But really when you think about it theres always going to be a 10-20% minority of the audience for which a topic or point doesn’t really apply to. I’m sure that Frank wasn’t implying and doesn’t think that ‘everybody’ has kids. And it would be cumbersome and unnecessary to point out every exception to the majority.

  • By Karen, July 27, 2010 @ 8:32 pm

    Part of the problem (for me at least) is without doing some compartmentalization, it gets hard to figure out what my savings goals should *be*. I’m fine with the money being both visible to me and transferable in and out of the accounts at will, since just mentally earmarking it for different purposes seems to be enough for me. But I have noticed that when I keep too much money in my “normal operating expenses” checking account, I tend to spend more, even though I’m using my credit card for everything anyway.

    I suppose in the ideal world where I had an infinite amount of time and energy, I would put more effort into sternly instructing myself that a dollar is a dollar, and my operating funds are worth exactly as much as earmarked funds. However I am more of a satisficer (it’s the hip new word for mentally lazy!), so instead I think a bit about what the purpose of my savings are, decide what I think is a reasonable plan of action, set it up to happen without too much input on my part, and re-evaluate every three months or so. Then I can instead waste my precious brain-sweat worrying about wargaming all possible contingencies (this is where I start turning into Crazy Savings Lady.)

  • By debt advice agency, July 28, 2010 @ 10:14 am

    I think your 20s and 30s are extremely expensive whether you have chikdren or not.

  • By Cash Jargon, December 16, 2021 @ 10:55 pm

    People spend much more when they are young. It’s just poor money management, when you get older, and wiser, you start to save, invest etc, most people don’t do this when they are young. The ones who do, usually get rich faster

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  • By Suites Mentor, July 12, 2022 @ 4:56 pm

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