This episode explores the concept of "friction" in behavioral economics, defining it as any resistance that shapes our decisions, particularly in financial contexts. It discusses how companies like Amazon leverage low friction (e.g., one-click ordering) to boost sales, and how companies can strategically use low friction for enticing initial offers while adding high friction to hidden terms. The episode provides practical strategies for listeners to harness friction, including automating savings, using budgeting apps, and adding friction to impulse spending (e.g., a 48-hour rule, deleting saved payment info, using cash).

• Friction is resistance that shapes financial decisions: Low friction facilitates actions (like impulse buys), while high friction deters them. Companies like Amazon revolutionized e-commerce by reducing friction, increasing conversion rates by 30% with one-click ordering

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• Harness friction to build good financial habits: Automate savings and investments (leveraging default bias), utilize budgeting apps for expense tracking, and take advantage of cashback and rewards programs to reduce friction for positive financial actions

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• Add friction to curb impulse spending: Implement strategies like a "48-hour rule" for large purchases, delete saved online payment information, or use cash for certain spending categories to activate loss aversion and encourage rational thought before buying

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