Everyone wants to have more money, but the process of doing so can be worrying. It can stress you out, and even make you stop functioning properly.
Money is the most common cause of divorces and stress in America. People lose their sense of problem-solving and end up with more things to worry about when they’re having financial problems.
People tend to make some foolish mistakes when it comes to their finances and human psychology is to be blamed for most of those mistakes.
Dan Ariely, a professor of Behavioural Economics at Duke University, published a book named ‘Dollars and Sense: How we Misthink Money and How to Spend Smarter’. This book enlightens you about some of the mistakes we make related to money and what can be done about them. Here are a few tips and tricks to help keep your cash flow positive with a good saving:
1- Use Cash More Frequently:
Do you know that weird, hesitant, sort of painful feeling you get when you pay in cash? Neuroscience confirms that the pain of paying is real. That is why many people use credit cards very often. Credit cards don’t just make you more willing towards paying more, but people usually end up making larger purchases with them. They don’t think as much as they do while paying in cash.
Of course, the above suggestion should not be applicable at all times. There are times when you just need to get your hands on something that you need. That’s when it’s okay to use whatever manner of paying you to want.
2- Drop Anchor:
‘Anchoring’ is a term used where a person gets manipulated by numbers. Let’s say you go to a restaurant to have a nice dinner with your family. You begin to decide what to order and while checking the menu card, the price starts from the most expensive things from the menu. What this trick does is, it makes you more likely to buy an expensive meal just because it’s changed somewhat lesser than the dishes you laid your eyes upon at first, which were the most expensive.
A simpler way to prevent this anchoring from making your decisions for you is to have an already established range in mind. Focus on a budget that you’re okay to spend on the meal and then place your order within the set limit.
3- “Fair” Is A Four-Letter Word:
If it’s raining outside, then you’re most likely to call an Uber, but are you willing to pay a hefty amount for your ride? That’s okay, many would rather walk. Maybe Uber can help you out in this situation, but now the real question arises, “Are you willing to pay for the ride or do you want to arrive at your destination wet and dripping?” There are times when we end up rejecting some opportunities while thinking whether that’s a fair amount, even if the opportunity holds value.
4- It’s Not A “Bonus.” Money is Money:
Don’t let the source of the money define it for you. Just because you received that bonus or a gift card, doesn’t mean that you get to spend it without thinking. Studies claim that if a $100 balance is from the normal salary then you’re more eager to keep it secure for later use. On the other hand, if that $100 is a gift from someone, you’re more than likely to spend it on something that makes you happy, like a treat or luxury.
5- Avoid The “Sale” Sign:
Even if a discount is offering you a 90% off for a product or service you’re likely to never use in your life, it will still count as overspending. That is because regardless of the amount you are spending on an irrelevant purchase, every dollar counts. Discounts are another way to manipulate our minds into thinking we’re making better financial choices when we’re not. Similarly, it contributes to our decision-making process and whenever we see a “Sale” sign, it instantly grabs our attention to thinking that we should buy it. Brands use this trick on their customers all the time.
6- Try The “Ulysses Contract”:
A Ulysses contract is a kind of obstacle we create to prevent ourselves from any temptation. The question arises, how to apply it on money? Well, this is how. You can set up an automatic transfer limit on your online banking account. This way, a sum of your money will be deposited into your savings account each month when you get your salary. This simple trick has helped people in saving around 80% more within a year.
People are prone to making mistakes with money. Learn how to make smarter choices. Money should not be your only priority, but it’s easier to focus on other important things after dealing with finances first.