Car crash chances
Is buying extra car accident insurance that reduces the excess worth it? Hedge fund manager John Hempton blogs that it depends on the real risk of a crash versus the costs. But even if the figures don’t add up, if a crash happens we may well wish we had bought that insurance anyway – an example of irrational “regret theory in practice”, he notes.
Income and spending may rise or fall by as much as 30% a month, and few households prepare for this – that’s according to a 2012-2014 survey of 2.5 million US bank customers, reported in the New York Times. Researcher Diana Farrell said in the article that people earning $40,501-$63,100 a year need $4,800 spare to cope with monthly variation – perhaps in an emergency fund – but most fall $1,800 short.
Bootstrap the budget
Motivating people to save money by setting specific goals can help them escape poverty, a Wall Street Journal article confirms. Research in the Philippines asked people to earmark specific accounts for things like education or home-buying; participants saved an average 82% more than those using conventional bank accounts. And a multinational programme enlisting 10,495 households helped people save 96% more on average, the article said.