3 Psychological Tricks to Help You Save Money

Posted by under Money Saving Tips, Personal Finance . Published: November 5, 2020

We all know that it’s important to save money, but why can’t everyone do it?

This is the question that behavioral scientist Wendy De La Rosa has been trying to answer for years. And in her study, she’s found effective ways that can help people improve their financial well-being by simply changing the way they think.

In this video, watch as she shares three of these psychological tricks. Or, you can just read a summary of her tips below.

3 Psychological Tricks to Help You Save Money

1. Harness the power of pre-commitment.
Fundamentally, we think about ourselves in two different ways: our present self and our future self.

In the future, we’re perfect. In the future, we’re going to save for retirement, we’re going to lose weight, we’re going to call our parents more. But we oftentimes forget that our future self is exactly the same person as our present self.

So take a moment and think about the ways in which you can sign up your future self for something that you know today will be a little bit hard. Sign up for an app that lets you make savings decisions in advance.

The trick is, you have to have that binding contract.

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2. Use transition moments to your advantage.
In psychology, we call this the “fresh start effect.” Whether it’s the start of a new year or even a new season, your motivation to act increases.

So right now, put a meeting request on your calendar for the day before your next birthday. Identify the one financial thing you most want to do. And commit yourself to it.

3. Get a handle on small, frequent purchases.
We aren’t machines. We don’t carry around an abacus every day, adding up what we’re spending, in comparison to what we wanted. But what our brains are very good at is counting up the number of times we’ve done something.

For example, I can only use ride-sharing apps three times a week. And this forced me to ration my travels. I got a handle on my car-sharing expenses to the benefit of my husband, because of the environmental changes that I did.

So get a handle on whatever that purchase is for you, and change your environment to make it harder to do so.

As human beings, we can be irrational when it comes to saving and spending and budgeting. But luckily, we know this about ourselves, and we can predict how we’ll act under certain environments. Let’s do that with saving. Let’s change our environment to help our future selves.

One more thing…

It’s interesting to see Dropbox as a sponsor of this video. It’s my preferred cloud storage service and I’ve been a premium subscriber for almost 10 years now.

This is the reason why I don’t carry around flash drives anymore because I can synchronize and access my important files anywhere across all my gadgets. Learn more about Dropbox here.

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