Money Lessons with Andrew Temte, PhD, CFA

In this episode of Money Lessons, Andy reads a pay stub for the lines most people skip past. 

He sorts every deduction into two types — the ones the law requires and the ones you elected, usually in the paperwork on your first day — and explains why a health premium, an HSA, and a retirement contribution come out of your pay before your taxes are figured, and why the federal taxes don't all treat those deductions the same way. 

Along the way he clears up the most common misunderstanding on the stub: the Social Security line is a tax paid to today's retirees, not a deposit into an account with your name on it, and the story of the first person ever to collect a monthly check shows why. 

He closes on the pay that never appears on the stub at all — the employer's share of the premium and the retirement match — and why two jobs with the same salary can pay very different amounts.

AndrewTemte.com

In this episode of Money Lessons, Andy supplies the vocabulary behind three weeks of teaching on habits, defaults, and friction. 

Herbert Simon — who was never an economist — challenged his era's assumption that buyers decide with complete information, and won a Nobel Prize for finding those limits inside companies before anyone thought to look for them in customers. 

Richard Thaler named the arrangement of options in front of you choice architecture, and a decade after publishing Nudge with Cass Sunstein, he coined sludge for friction pointed at the person who has to get through it. 

AndrewTemte.com

In this episode of Money Lessons, Andy turns from the money machinery listeners build themselves to the machinery that gets installed before they arrive. 

He starts with the default — what happens if you do nothing — and shows how much of a household's money moves according to settings that somebody at a company chose in advance. 

The workplace retirement plan serves as the rare example of a default that works in the saver's favor, along with a caution that plenty of employers are still exempt from it. 

From there he takes up friction, the effort standing between wanting something and having it, and traces how the same business will strip every step out of a purchase and then build steps into the exit. 

AndrewTemte.com

In this special edition of Money Lessons, Andy takes on a question that sits underneath most of personal finance: why change is so hard. 

A complaint about his band's setlist leads to the research on why musical taste is set around age fourteen — and to the study showing that appetite for financial risk locks in the same way, set by whatever the markets were doing when a person first had money in play. 

Neither one was a decision. Both feel like one.

AndrewTemte.com

In this episode of Money Lessons, Andy opens up the machinery that moves money out of a household without ever passing through a decision. 

He starts with the narrow definition psychologists use for the word "habit" — a behavior repeated in the same surroundings until conscious decision-making drops out — and walks through the 2002 wristwatch studies that measured how often people's minds were somewhere else while they acted. 

He makes the case that habits are not a character defect but a feature that buys back mental energy, then shows why the same mechanism that makes a habit useful is what makes it nearly impossible to recall. 

AndrewTemte.com