Boost your savings with simple psychology-backed money tricks
What's the story
Saving money can often feel like a Herculean task, but knowing the psychology behind spending and saving can ease it.
By tapping into some psychological tricks, you can boost your savings without feeling like you're missing out on something.
These are not about ditching all fun or living frugally, but making changes in your mindset and habits to boost your savings naturally over time.
Visual cues
The power of visual reminders
Visual reminders can affect your saving habits a lot.
Keeping a picture of what you are saving for in a visible area, say on the fridge or near your workspace, keeps the goal mindful.
Not only does it serve as a reminder of what you are working toward, but it also curbs impulsive spending by reiterating the significance of saving for that goal.
Automation
Automate your savings
Automating savings is the best way to ensure consistency without breaking a sweat.
Set up automatic transfers from your checking account to a savings account each month.
This way, you eliminate the temptation to spend money before you save it.
By treating savings like a non-negotiable expense, like rent or utilities, you place building wealth over needless indulgences.
Mental accounting
Use mental accounting wisely
Mental accounting refers to the practice of segregating money into "accounts" in our minds, according to where it came from or what it is meant for.
Leverage this by creating separate accounts for different goals, such as emergencies, vacations, education funds, etc.
This separation makes it psychologically difficult to touch these funds for non-related expenses, since each account has a purpose and importance of its own.
Rewards system
Implement a small rewards system
Incorporating small rewards when reaching certain saving milestones can boost your motivation and commitment.
For instance, treat yourself with something modest after hitting every ₹5,000 saved mark.
These rewards should be small enough not to derail your progress but significant enough to provide satisfaction and encouragement along the journey toward larger financial goals.
Mindfulness
Practice mindful spending
Mindful spending means being completely aware of how and why you are spending money at any point.
Take a moment before making a purchase and ask yourself if you really need it or if it's just satisfying an emotional need for the time being.
Mindfulness can help curb impulse buys by prompting you to make thoughtful decisions in line with long-term financial goals, not temporary cravings to gratify.