Saving money better: Understand these three behaviours to get your finances on track
It can be challenging to get the ball rolling where debt is concerned. It’s a game of inches, and the brain can get in the way by making us reluctant to get on with the work we know we need to do!
Thankfully, being the smart people we all are, we can use a few crafty tricks to hoodwink our brains to success! Changing your behaviour is possible, and it can have profound results for your financial health – and your wellbeing as a result. Let’s take a look.
Don’t stick your head in the sand
Facing the challenge of paying what you should can be tough. The common fallback many turn to is known to some as the ‘Ostrich Effect’. As the name implies, it’s all about the poor but common habit of sticking your head in the sand.
Where money is concerned, it’s bad news. Interest is a killer of savings, and avoiding payments does little to help you alleviate that issue in your finances. There are two things you can do here: look into getting automatic statements that can be sent to your email, and look into making recurring calendar appointments on your device of choice to remind you regularly that payments must be made.
Small little tricks that remove the subtle barriers between us and taking action can have a profound effect. Try it!
Payments can be painful, and that’s OK
It might sound a little perverse to suggest making payments painful, but it’s got simple and sound psychological reasoning behind it! The phenomenon of loss aversion is a real and known factor in behavioural psychology; simply put, we’re biased to avoid losses more than we are to do something that gives us a net gain.
Unfortunately for us savers, the world is built to make spending easy. How simple is it to set up one-click ordering on Amazon and blow away your money on frivolous purchases? You can fight back at this – and increase your saving power – by using cash.
Let’s say you are going out to the shopping mall with your friends. Set a budget and take it all out in cash. When the time comes to buy that snazzy item of clothing for £100, you’ll have to take it out in cash from your wallet! This really drives home the importance of the purchase you’re about to make and will make you more careful. You’ll spend less and you’ll appreciate your purchases more – everyone wins!
Sign a deal with yourself
A powerful way to get things done is to use what behavioural scientists call a ‘commitment device’. In short, you make a list of those tough but valuable things you really need to get done, you print it, and you sign it with a pen at the bottom, stating ‘I will get this done’.
The act of summarising, printing and physically signing a document has, scientists believe, a profound change on how you will view those tasks – and your likelihood of completing them. Commitment devices are now known as powerful tools in the fight to break habits and are ideal for kickstarting an effort for common goals like getting to the gym and saving money.
A helping hand from Citrus
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