Spending
A subscription renews by silence, and that changes the whole calculation
Recurring payments continue unless a decision is made to stop them, which is a different arrangement from…
· 4 min read
Aditya Ramaswamy
Deputy editor, Dollars & Decisions
Aditya covers spending, saving, debt and the questions readers actually send in and thinks most subjects are more interesting once you know how they work.
21 articles
Spending
A budget is a forecast, and forecasts are supposed to be wrong
Most household budgets collapse because they are treated as promises about the future rather than estimates…
· 3 min read
Saving
In the early years the amount saved does more work than the rate earned
Returns act on a balance, so when the balance is small the return is small too — which puts the…
· 3 min read
Saving
A savings goal without a date attached is not yet arithmetic
Adding a deadline to a target converts a vague intention into a monthly figure, and that figure is what…
· 3 min read
Saving
Access and return are two separate questions about the same money
How quickly money can be reached and what it earns are traded against each other, which is why one pot…
· 3 min read
Debt
The two orders of clearing debts optimise different things
Paying the most expensive debt first minimises interest; paying the smallest first produces completed…
· 4 min read
Debt
Clearing a debt returns a known number, and that is what makes the choice hard
Money used to reduce borrowing earns a return equal to the rate avoided, with no uncertainty attached…
· 3 min read
Investing Basics
An index fund follows a rule rather than making a forecast
Tracking an index means holding what the index defines, in the proportions it specifies, which removes…
· 3 min read
Investing Basics
A fall and its recovery are not the same size
Percentages are taken from different bases on the way down and the way back, so returning to the starting…
· 4 min read
Spending
Renting and buying a home are two different cash-flow shapes
The choice is usually argued as though one option is throwing money away, when the real difference is in…
· 4 min read
Debt
Paying at the till in instalments turns a price into a payment
Point-of-sale credit rearranges the decision being made, replacing a comparison against what you have with…
· 3 min read
Investing Basics
Putting a lump sum in at once and feeding it in gradually answer different worries
Spreading an investment over time reduces the consequence of choosing a bad moment and, on average, gives…
· 3 min read
Money & Mind
People forecast their own spending with a range that is far too narrow
Estimates of what a project or a month will cost are consistently too low, not because of poor arithmetic…
· 3 min read
Spending
An extended warranty is an insurance product sold at the till
The cover offered alongside a purchase is a small insurance contract, and the questions that decide whether…
· 4 min read
Saving
A windfall is easier to lose than money that arrived slowly
A lump sum that was never planned for gets treated differently from earned income, and the way it is…
· 3 min read
Saving
Holding money in another currency adds a second thing that can move
A balance abroad has two variables rather than one, because what it earns and what it is worth in your own…
· 3 min read
Money & Mind
Most people rate their own financial judgement above average, which is arithmetically impossible
Confidence in money decisions consistently exceeds the accuracy of those decisions, and the gap does…
· 3 min read
Spending
What an object costs to own usually outweighs what it cost to acquire
Purchase price is a single payment and running cost is a stream, and past a certain length of ownership the…
· 3 min read
Debt
A deposit does three separate jobs, and only one of them is reducing the loan
Money put down at the start of a secured purchase shrinks the amount borrowed, changes the price the lender…
· 4 min read
Debt
A loan should not outlive the thing it paid for
Matching the length of a borrowing to the useful life of what it bought is the difference between paying…
· 3 min read
Investing Basics
An asset that pays nothing can only be valued by what someone else will pay
Holdings that produce no income have no stream to discount, which means their price rests entirely on what…
· 3 min read