The Psychology of Saving

When we think about our relationship with money, it’s all too easy to view it a series of external attributes: the bank account, the credit card and so on. But there’s a whole lot going on beyond the simple arithmetic of income and expenditure. And if you’re looking to explore better ways to save and spend, it’s worthwhile investigating the psychological aspect of finance. It’s a method that I stumbled upon by accident a few years ago when I successfully lost weight – and realised that mood, attitude and personality quirks can have a far greater effect on reaching our goals than may be immediately apparent.

I’ve chunked out the most salient parts of this money-saving strategy below. If you have anything you’d like to add – or maybe even want to discuss, feel free to leave a comment below.

Locating your values

Pretty much anyone can be rich, if they really want to be. This may sound overly optimistic, for sure. But I had an old aunt, and she was awash with cash. She and my uncle were ordinary people in low-paid jobs. They got rich by never wasting anything – not one drop of food. Even a single stick in the garden would be put to use, either on the fire or as a makeshift splint in case any first aid emergencies arose. Yes, they were undoubtedly creative folk. Their Christmas presents were all home-made from stuff ordinary people would have put in the trash without a second thought. But here’s the thing – in all of that assiduous money-saving, one big fact never occurred to them. If you never spend money on anything beyond the very barest necessities, you may as well be living in penury! Now I don’t know about you, but living in penury isn’t high on my list of values.

The obvious lesson here is that it’s all about balance. Saving money is a bit like pruning a hedge – cutting away unnecessary expenditure. Hack away too much, and all you’ll have is an unappealing stump.

Bad habits make our decisions for us…

…if we let them. Change your habits and you will see your bank balance gain health as a result. The first step here is to write down every single purchase you make, every single day. The simple act of doing this has two immediate effects – the first is that it helps you confront your spending in complete honesty. And the second is that it helps you see patterns within your expenditure. And these are where you can identify habits to change. Just one switch to a cheaper lunch can up your disposable income more than you think. A few other habit changes – if you stick to them – can amount to enough money for foreign holidays, reducing debt, and lots more.

Do your due diligence

In a world awash with all kinds of tempting offers and (sometimes) exciting adverts, it’s easy to get carried away and press the ‘buy’ button without shopping around. So if you’re looking for a big purchase, be doubly diligent. If you’re getting a car, work out what your repayments will be – obviously! But also keep an eye on depreciation – this depreciation calculator tool is the kind of thing that can help you find a car that may keep better value than its counterparts. Looking to move house? Then there are similar tools for working out your mortgage payments – although hopefully your house won’t depreciate the way a car is likely to.

Check your brainwaves

The psychology of shopping is a fascinating subject – but you don’t need to be a college professor to counteract its effects. Just equip yourself with some of the basics, like being aware of signage and the positioning of products. Shops may lead you to certain offers, when the real bargains are never front and centre. And always use your phone’s calculator app to make sure that any special offers are actually getting you more for your money.

While these external things are good to look out for, always be aware of your inner feelings when you are in a commercial environment. Stress may lead you to spend more than you set out to. One handy way that works for me is to load up my phone with lots of calm music that doesn’t have a backbeat. I call this “Zen Shopping”. Amazingly, by drowning out the instore music and announcements, I often leave the shop with exactly what I went in for – and without spending a cent more than I intended.

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