Want to Make Better Financial Decisions? Put Your Phone Away.

If you’re reading this sentence on a smartphone, laptop, or tablet, there’s a good chance that your mind is divided. You’re waiting for the next notification, phone call, or text message you’ve been expecting, and your attention span suffers as a result.

Image from our good friend Carl Richards,  The New York Times

Image from our good friend Carl Richards, The New York Times

When you juggle several interests at once, your brain doesn’t distribute attention equally—it flips from one to the other without fully digesting anything. 

Our smart devices enable (and encourage) nonstop connection to information, entertainment, and people. The internet transformed what was once an information drought into a flood, but there’s a trade-off: we lost the ability to think deeply, particularly when it comes to money. 

Preliminary research from the UCLA Anderson School of Management found that people perform worse on financial literacy tests when answering the questions on a mobile device compared to others who take the same test on paper. Their theory is that the mere presence of a smartphone splinters one’s attention span, leaving fewer resources available for deep thought.

Important decisions about wealth management and retirement require careful deliberation, especially when there are difficult trade-offs involved. But in our get-it-yesterday culture, financial wellbeing is often lumped into the same category as sports scores and Facebook notifications.

What’s more, financial apps (especially ones that are allowed to send notifications) turn us into lab rats constantly pressing a lever to satisfy our curiosity. These shiny toys might promise to keep us in the know, but more often than not they prevent us from Taking The Long View.

There’s no app for that.

There’s no shortage of tips and tricks to make you financially savvy, but the most effective way to make better financial decisions could be as simple as keeping your phone on a charger instead of in your pocket.

PJ McDaniel