Photo by Tahar Abroudjameur via Flickr

I recently got a wisdom tooth removed. My dentist had been nagging me to do it for years. Why the delay? I don’t have dentophobia. I’m not an anti-dentite. I just didn’t want to save the money (or spend it). But for the grace of my flex account, I was able to squirrel away nearly $700 (tax free, no less), and pop that tooth out.

My flex account automatically takes money out of my paycheck and saves it for medical expenses. It’s an example of behavioral economics. Traditional economics assumes people make rational decisions; behavioral economics assumes we’re human. And flawed. And irrational. And it creates systems to correct for these weaknesses. Instead of assuming that I’m a rational person who knows I need to pay the dentist and will save money to do so, behavioral economics knows that I’m much more likely to save money if I don’t have to think about it. Take $25 out of each paycheck, put it in a special account, and voilà, I can pay the dentist.

I think we should transfer this concept to housing upkeep and rehabilitation — especially for first-time homebuyers. First-time homebuyers are typically cash poor. They’ve saved money for a down payment and closing costs and they’re tapped out. Anybody who owns a house knows they need to keep some cash handy for, say, a new water heater, furnace, or roof. Why not make a flex account for your house then? Add $50 to each mortgage payment, put it in a special account, and voilà, I can pay the roofer. I won’t even need to think about it.