Saving money has been a challenge for many people. By understanding how our brains work and using a few psychological tricks you can get yourself ahead of the average person when it comes to saving money.
Here are 12 easy and effective ways that will help you to save money.
1. The 30-day rule
When you feel the impulse to buy anything make the conscious effort to wait 30 days before buying it. When you do this a few things will happen. You reduce emotional impulsive buying. This is great because it works immediately but if you do this consistent enough this will actually become a natural behaviour.
So when the feeling of purchasing something begins to happen your natural behaviour will be to wait. Chances are that you won’t feel the desire for that product anymore after you’ve waited for 30 days.
Normally when we want to buy a product is because that product is probably pretty popular at the time, meaning it is at a peak price. So even if you wait for 30 days and you still wanted it chances are you might be able to buy it at a reduced price.
2. Avoid advertisements
In today’s world, it’s pretty much impossible to get away completely from advertising. I mean simply going to the grocery store and walking by the checkout line you are being advertised with many different products.
The truth is companies pay a lot of money to hack the psychology of the consumer to make them want to buy. So staying away from them altogether as much as you can be very helpful. Think about it a lot of the products you buy are because you saw a form of advertising.
3. Automate your savings
Saving money can be difficult especially if your expenses always seem to keep up with your income. This can make it really hard to say but by automating a portion of your income to go straight to your savings will make it much easier for you to save money.
You don’t have to do anything and our brains are very adaptable. Chances are that after a couple of months you won’t even know that you’re putting away that 10% of your income. Your brain will naturally adapt.
4. Give your savings account a meaningful name
If you do this you will be surprised at how powerful this little hack can be. If you’re saving money to invest and grow your wealth or for your kids’ college education, giving your savings account a meaningful name will make it much harder to take money out of that account by naming your savings to account after your son or daughter.
For example, you are attaching emotion to this account and it’ll make you much harder to cash out. I mean think about it. If you have a savings account named after your daughter or your mom you don’t want to hurt it.
5. Eat before going shopping
I’m sure this has happened to you. You go to the grocery store hungry and you end up buying things that you absolutely do not need. By eating before going to the grocery store you will limit your hunger driven impulse purchases.
6. Create a meal plan and a list before going grocery shopping
By knowing exactly what you need can help you avoid buying things that you don’t need or buying too much while you do need. When you have a meal plan you have a good idea of how much you need of each unit. So this way you don’t buy too much of it and have it go to waste.
Having a list will help you spend a much less time at the grocery store and prevents the hassle of going back because you forgot something and spend less money. The more that you go to the grocery store the more you tend to spend.
7. Use cash
Humans are very motivated by not losing things. We naturally do not like giving up things that we already have. When you use cash you feel like you’re giving away something that you have, but when you pay with your card you still keep the card and your brain doesn’t have the natural feeling of losing something.
It is harder to hand over cash when you buy those cool headphones than it is to swipe a card. Always try to carry big bills. Who wants to break up a big note for a little pack of gum.
8. Convert money into time
Whenever you see something that you want to look at the price in terms of time. If you convert the price of those sunglasses to how long you would have to work to pay them would you still buy them? Are the glasses worth losing seven or eight hours of your life?
This will give you perspective on what you are actually spending and what it takes to earn it by thinking of the time that you’re spending on this product. Are you willing to give up hours of your life for a new TV or is there something better you can spend your money on.
9. Monthly income & and track your expenses
Create a monthly income statement and track your expenses. When you write down how much money you’re making and how much money you’re spending gives you an insight of where your money is going.
By simply knowing where and how you spend your money will help you be more conscious of your spending and it doesn’t have to be complicated.
You can simply split a piece of paper or do it on a whiteboard into two parts. One is for your income and another one is for your expenses. Then you simply keep track of how much money you’re making on one side and how much money you’re spending on the other.
At the end of the month, you see if you had a surplus of money or a deficit of money. If you had a deficit you have to practice the tips on this article.
10. Track your net worth
Say that after doing all of these tips you were able to save some extra money and if you don’t have any savings and your monthly income statement you write down your net worth. You put down this extra saved money every month you update your net worth.
There’s a funny thing that happens when you write down your net worth. You won’t feel very comfortable if it goes down next month because this number represents your worth not your worth as a person but your economic worth. We don’t like to feel like our worth is going down and we get excited when it’s.
11. Spend money on yourself
We’re talking about saving money and now I’m telling you to spend money. Yes, I am. The reason why many people are not able to save money is that they spend lots of money on things they don’t need. It’s sort of a craving you feel good when you treat yourself.
So instead of suppressing that part of yourself that wants to enjoy give it a budget to have fun. You can allow a small percentage of your income to be used for fun. This can actually help you save. If you’re always saving this part of yourself the likes to spend might actually sabotage your efforts. You get to have fun and you won’t feel negative about saving.
12. Make more money
Make sure you are making enough money then you are spending. When your income increases make sure your expenses don’t go up. Otherwise, you’ll just work harder but you won’t have anything in the bank to show for it.