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3 Simple Ways to Stop Spending and Save More Money


Why can somebody who earns $50K a year save as much as somebody on $100K? Assuming we’re talking about two people of similar age, stage, and circumstance, how is it possible for the lower earner to save more? 

When I asked behavioral economist and psychologist Phil Slade this question, he said a “fascinating psychological phenomenon comes into play here — it’s a problem of relativity; a struggle with loss aversion. If someone on $50,000 ($961.54 per week) considers spending $500, the pain of the loss relative to their income is greater than the loss felt by the person on $100,000 ($1924.08 per week). Therefore, because a large part of our spending consists of many smaller purchases, the person on $100,000 is likely to spend more because it doesn’t feel so painful when each ‘loss’ seems small. This can have the effect of making money more fluid and harder to save.”

The good news is that it’s possible to change your money behaviors, and this comes down to the triggers that trip you up. A trigger is something that encourages you to spend money needlessly. Here are three triggers to watch out for.

I had a bad day.

Whether it’s work deadlines, the stress of getting kids to school, a fight with your partner, or just not feeling 100 percent, stress can definitely trigger spending. The attitude of “I deserve it!” often justifies a spending binge.

What Phil suggests: Try splitting your bank account into multiple accounts and naming them for specific purposes. It limits spending to the account your card is attached to and highlights the consequences of robbing one account that’s earmarked for a particular expense.

I can buy it now and pay for it later.

Credit cards and “buy now and pay later” services give us an easy way out. You know you don’t have the money to buy it, but somehow you justify it. It’s about instant gratification and because we’re not parting with cash, we don’t feel the pain!

What Phil suggests: Resist the urge to go into a repayment scheme and create what I call a self-made lay-by system. Figure out what the weekly repayments would be and put that amount each week into a separate account until you’ve saved up the purchase price (or at least a large portion if it’s an expensive item like a car). This will save you money on interest, test whether you can afford the repayments, help you avoid credit traps, and give you time to think more rationally about the purchase.

But it’s on sale!

Our brain does funny things when we see a 40 to 70 percent off sale. We focus on the savings of the sale rather than the spending. Throw in “free shipping,” “limited offer,” or “only one left,” and we jump on it!

What Phil suggests: There is an old negotiation saying that goes “if you can’t walk away from a deal then you won’t get a good deal.” Picture yourself walking away from the purchase and see if life goes on. If so, then maybe you should let it go. Still want to buy it? Try mitigating the effects of “anchoring” — a little trick retailers use to present the “original” price or RRP in order for our brains to judge how valuable something is. Practicing “delaying gratification” stops you from making impulse buys and changes the “loss” equation to focus on how much you’re losing out of your account, as opposed to losing out on a great deal.

This article originally appeared on our sister site, Homes to Love

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