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Everyone knows that you need to save money, but few people succeed. And it's not about problems with motivation and will. The amount of deferred funds is highly dependent on external incentives. Here's how to turn them to your advantage.
In 2017, economists conducted a study Case study: Using mental models to manage food stamps efficiently / Center for Advanced Hindsight among people receiving food subsidies. The participants were divided into two groups: one showed the amount of benefits for a month, the other — for a week. It turned out that the latter are better planning expenses. Although the amount of the subsidy did not change, they had enough money for a longer period.
A simple change of context helped people. Usually food allowances are accrued once a month. There is a false sense of security: it seems that there is a lot of money. Because of this, it is very easy to spend them unwisely, and by the end of the month limit yourself in everything.
We are all subject to such a error of thinking on payday. To avoid it, try dividing your monthly income into weeks. It's easier to plan expenses this way.
Researchers from Common Cents Labs conducted several surveys to understand which expenses people regret most often. In the first place was Common Cents Lab unveils millennial financial regret spending study / Common Cents Lab eating out. Coffee and snacks on the go for a month add up to a decent amount that could be postponed or spent on something more important.
Perhaps you don't drink coffee at all, but you probably have expenses that you regret. Identify them. Then change something in your environment to make these purchases more difficult. For example, remove the bank card data from those sites where you spend too much. If you can place an order without a card in the app, delete it from your phone.
You can also set a limit for yourself. For example, you can only take a taxi five times a month and visit two or three movies, no more.
We usually perceive ourselves in the present and ourselves in the future as two different people. Moreover, we have more optimistic forecasts about our future version. We believe that she will start playing sports and saving for retirement, and we don't have to worry yet. But you in the future are still the same you, and you need to postpone now.
The researchers came to the conclusion Case study: How pre-commitment leads to better tax-time savings / Center for Advanced Hindsight that it is easier if we make a decision in advance. They interviewed two groups of people: some before they received a tax deduction, and others after. Everyone was asked what percentage of the amount they are willing to postpone. In both cases, the participants assumed obligations that cannot be waived. They knew that the promised amount would be credited to their savings account.
It turned out that those who are just expecting a deduction are ready to postpone about 27% of the total amount. And those who have already received money — only 17%. Quite a big difference. The fact is that the first group responded by thinking about a future version of themselves. Naturally, it seemed to them that someday later they would be more responsible and economical.
Use this principle to your advantage. Decide how much you will put aside, not after receiving your salary, but in advance. For example, set a percentage in the banking application that will be automatically transferred to your savings account. And treat it as an obligation that cannot be waived. Because your future largely depends on it.
The researchers proved their benefit by conducting an experiment Case study: Using age milestones to motivate behavior / Center for Advanced Hindsight with ads. They posted two advertising banners on social networks for a website that helps elderly people rent and rent housing. Both were aimed at people aged 64, but used a slightly different approach.
On one it was written: "The years do not stand still. Are you ready to retire? It's easier if you share a place with someone." And on the other: "You are now 64, will soon be 65. Are you ready to retire? It's easier if you share a place with someone." The second banner was clicked twice as often, and the number of registered users on the site also increased.
The fact is that he focuses on a turning point in life — retirement and the changes associated with it. In psychology, this is called the "blank slate" effect. At the beginning of the year, on Monday or birthday, motivation usually increases, we want to act. Use this effect to achieve your financial goals.
Create an event in the calendar the day after your birthday. Choose the goal that is most important at the moment. For example, open a pension deposit or pay off a loan debt. A reminder of this goal at a "turning point" will help you start acting.
