5 money-saving mind tricks
21 January 2015, 08:53
Lagos - We all know some much repeated ways to save money, like taking some off the top and paying yourself first, planning and sticking to a budget, never leaving the house in fear of spending money (you don’t have) like a Hollywood rapper.
But we still find ourselves
partying spending like it’s 1999. Well, here are 5 money saving mind tricks you may not have tried before.
Money is time.
You’ve been eyeballing a hot new Smart TV, even though there’s nothing wrong with your current one.
What can quickly put a 'want' into perspective is thinking about how much time (not money) the item you want costs.
Think about what you earn per day or hour and see how many days or hours of work that smart TV will cost.
Is your time worth the expense? Thinking about it this way may change your perspective a little.
Resist the decoy effect.
Shopping centres and marketers have clever ways and means of encouraging you to part with your money, but the wiser you are to them, the easier they are to resist.
The decoy effect is when stores place one product next to a similar but more expensive product.
For example, there’s a camera for KES 40,000 and one right next to it for KES 77,000.
When people feel they’re getting a good deal, they’re more likely to make a spontaneous purchase.
You buy the KES 40,000 camera because you think it’s a super deal and you saved KES 37,000. But the camera still cost you KES 40,000.
Get real about the fantasy life.
Some of us are guilty of buying things we won’t ever actually use. We buy them for the life we would like to lead, like scuba diving gear for all those exotic beach vacations you want to take.
Or a mountain bike for the extreme sportsman you want to be. Those are all great things to aspire too, but before you head out and buy a new kayak, ask yourself, "Will I actually use this or am I buying it for my fantasy life?"
It’s (not) yours.
A common cognitive bias that kicks most of us in the butt when it comes to spending is called the Ownership Effect. Basically what happens is we become more willing to pay higher prices for things we think we already own.
If you are out shopping for a new couch, for instance, you spot one you think is perfect and create an ‘attachment’ to it.
You start to picture it in your lounge with beautiful scatter cushions; you see yourself snuggled up on it with a good book and a cup of tea.
At this point in your purchasing process, you have built up this couch in your mind and it flips a switch that makes you value it more highly than other couches.
Now, no matter the other options presented to you, even if they are cheaper and similar, you will be more willing to pay more for the couch you think you already own.
See the bigger picture
Having a picture of your financial goals, like a jet ski or new fridge, right next to a photo of your loved ones might not be the most romantic thing, but having a picture to remind you of what you are working towards can really help nip any trivial or impulse buy in the bud.
Article by 22Seven.