While some people are lucky enough to be taught good spending habits by their parents and stick to them for life, others have a less sensible approach to their finances. Whether you tend to overspend, forget to budget for necessary expenses before treating yourself or rely on borrowing money too much, people often fall into bad financial habits. Mentally, breaking a habit can be tough, and regardless of all your good intentions, it can be easy to fall back into those oh-so-familiar patterns. But, what if you could train your brain to manage your finances better? Here are five mental hacks to help you spend less and save more.
Out of Sight, Out of Mind
If you can see your money, whether it’s in your wallet in cash or easily accessible from your mobile banking app, you’ll be more tempted to spend it. But, hiding your money away will help you to forget about it more easily. A good way to do this is to open a savings account with a bank that is different than the one you use for checking. This way, when your income is paid into your checking account, you can pay yourself first. Then, you can relax for the rest of the month, knowing that your savings have been dealt with. Don’t worry too much about the amount that you save at first – even if your budget only allows for a few dollars per month, it will add up over time.
Restrict Your Access
If you often give into the temptation to overspend your money, then you could consider restricting your access to your savings. A fixed bond account, for example, will lock your money away for a period of one year or more as you pay into it. Meaning, that once you’ve deposited or transferred it, you’ll no longer be able to withdraw your money until the designated time is up. But, being completely unable to access their cash just doesn’t work for some people. Instead, you could make this work by creating obstacles which will make it a little more difficult for you to access your savings. For example, you could invest your money in a brokerage account, which will require you to expend some effort to get access to your money.
Budget for Less
Rather than working out your budget using the whole amount that you get paid each month, take as much as you can afford from it to dedicate to your savings account. Then using the amount that you are left with, work out your budget for the month ahead. This will make it easier to avoid overspending, and will motivate you to find ways to save money on your monthly expenses, for example cheaper insurance policies, or a lower rate for your utilities. After a few months of doing this, you’ll adapt to living on a lower amount whilst your savings grow.
Compulsive overspending can be a symptom of stress, anxiety, depression, and some personality disorders. If you believe that you are overspending due to mental illness, it’s important to seek help from your doctor as soon as possible to treat the underlying issues. If you spend when you feel stressed, mindfulness meditation may be able to help. This ancient Buddhist technique has recently taken the world by storm, and involves relaxing the body and soul through deep, yogic breathing and inward focusing. Next time you feel the urge to spend, try this: Sit, cross-legged on the floor with your eyes closed. Slowly inhale through your nose deeply, then back out again, focusing on your breathing and the movement of your abdomen. As you continue to do this, you will begin to relax and gain control.
Continuously setting small savings goals and meeting them, then rewarding yourself for doing so is much more enjoyable than simply saving and saving all the time. If something makes us happy, then we’re more likely to go back and do it again…and again. So, turn your money saving strategy into something enjoyable for yourself, by dedicating a percentage of the money that you save to something specific to look forward to like a new car or a vacation.
Have you managed to trick yourself into saving more money? We’d love to hear all about it in the comments!