Your new year’s resolution was to save more, spend less. Unfortunately, you’ve since fallen off the bandwagon. You know you’re overspending and splurging way too much on unnecessary buys, but it’s hard to actually stop yourself. Sounds familiar? Try out these nifty tips to trick your brain into spending less.
It’s all too easy to spend money when it’s lying conveniently in your wallet or bank account. But that indulgence is not a healthy habit, financially speaking.
With the rising costs of living, it has become more imperative for us to squeeze the most of our pay cheque and to adopt better saving and spending practices.
Sometimes, though, the mind doesn’t quite catch up with our best intentions. We think about doing something new, but our mind quickly falls back into old habits. Terribly frustrating, isn’t it?
Here's our mistakes. Don't do the same.
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
So, how can you instil better financial discipline? Our answer is: tap into your psyche to control your spending impulses.
Here are 10 fun tricks we think you should try to outsmart your brain into spending less.
1. Create visual reminders of your goals and place them in strategic spots
Studies have shown that visual reminders can help you curtail your spending and reach your financial goals on time. For example, if you’re saving up for your own house or a beach holiday, print out a picture of your dream home or ideal holiday destination and keep it in your wallet. Better still, keep the picture right over your credit card.
What this does is to create a psychological barrier. Every time you reach into your wallet for cash or your credit card, you’re forced to see the picture and second-guess yourself: should I buy this item now, or should I save the money for my bigger goal?
2. Convert the cost into meaningful everyday units
Let’s say you want to buy an Xbox One for gaming with your friends, and it costs $700. Not quite the kind of spare cash you have lying around.
Think about something else that you enjoy on a regular basis, like your $7 daily cup of coffee from Starbucks.
Then compare the two: with the same amount you pay for the Xbox, you’ll be able to get 100 cups of coffee. The coffee can tide you through at least three months of dreary workdays in the office, whereas the Xbox will only be used for a few hours during the weekend. Now, does the Xbox still seem like such a tempting deal?
An alternative way of doing this is to break down the monetary value of your hour. A lawyer we know converts the cost of every big-ticket item he purchases into the amount of time he takes to recuperate the cost. For instance, assuming he charges $500 for every hour of consult, then the $5,000 Rolex he’s eyeing isn’t just $5,000 from his pay cheque; it’s 10 hours of his life. He says this method helps him put things into perspective and cut down on impulse buys.
3. Take a 24-hour breather before making any purchase
Just as Totto-chan learnt to “look before you leap”, you should think before you buy. Too many people buy things to “validate” their position in life or to make themselves feel better (think retail therapy). Sure, that quick rush of getting something new might feel good, but what about after the endorphins wear off? You’ll likely find that retail therapy isn’t quite so therapeutic after all.
Our suggestion is, give yourself at least a 24-hour waiting period before making any purchase, so that you have time to reflect on why you need that particular item or maybe even look for cheaper alternatives. If you forget about the item after you walk away, it’s a clear sign that you didn’t need it in the first place. Don’t fall into the trap of shopping on the spur of the moment and regretting it thereafter.
4. Stick to a daily budget
If you aren’t already budgeting, you should really start doing so. Check out this brilliant guide on How to Set a Budget – and Stick to It.
In a nutshell, estimate how much you need for variable spending each day – say, $30 to cover all your meals, transport and entertainment expenses – and make sure you do not bust that limit. Remind yourself that getting a $25 lunch special means you’re blowing almost your entire budget on just one meal alone, so it might be better to stick to your $5 cai fan instead.
5. Treat every purchase like an investment
Of course, there are exceptions to when we think certain purchases are worth it, despite the extra cost. We got this advice off Reddit: “Spend your money where you spend your time”, which we think is a pretty good way of sieving out genuine “needs” from superficial “wants”. For example, if you’re a gym rat or an avid runner, it might be worth your while to invest in a pair of well-fitted sports shoes, even if they cost $200 more than any regular pair off the street. Just make sure that you get enough mileage out of those shoes to justify the cost.
Spending less doesn’t mean you have to live on a shoestring or behave like Ebenzer Scrooge; it simply means you have to be more conscious of where exactly you’re spending your money and trimming out the superficial buys.
6. Pay in cash as much as possible
As a general rule of thumb, you should only use your credit cards for big planned purchases, like paying for household electronics or air tickets and hotel accommodation. When you’re out shopping, try to pay in cash as much as possible rather than using your credit card, especially if the total cost is less than $100. The reason for this is simple: when you see cold hard cash leaving your hands, you tend to spend less because you feel the pinch more.
For an added deterrent to curtail your spending, try to keep newer dollar bills in large-value denominations (like $50) in your wallet. If you’re like us, you must have noticed that you tend to give away small notes faster, plus spend more freely with old or grimy-looking notes. There’s actually a science behind such behaviour: according to a study by the Journal of Consumer Research, the physical appearance of money can override the influence of its denomination. This means that subconsciously, we want to hold on to crisp currency but have less qualms about spending worn notes.
Not to worry though, there’s an easy mind trick to get around this: simply gather all your old notes every day and deposit them into a piggy bank. Then at the end of the month, transfer the savings into your bank account to earn some extra interest.
7. Make use of expense tracking apps diligently
Forget old-school methods like Excel spreadsheets; there are many mobile apps available that can help you keep track of how much you’ve been spending. We recommend you try these.
The beauty of using an expense tracking app is that it “trains” you to be accountable for your spending habit. You may know you’re overspending, but sometimes you don’t realise just how much you’ve bust your budget until you actually see the figures. That’s when guilt and remorse set in. Use these feelings as motivation to spur you into cutting out unnecessary purchases and start spending responsibly.
8. Avoid bargain stores and shopping with friends
Okay, we know this is a bit of a tall order, but sometimes shopping with friends isn’t such a good idea. You get subjected to peer pressure (“Oh my god that dress looks amazing on you, you should totally get it!”), which may lead you to buy something you weren’t so sure about in the first place. Or if your friend buys something nice, you may feel tempted to buy the same or a similar item, which is also bad news for your wallet.
Our suggestion is, if you really need to shop, draw up a shopping list in advance and hit the stores alone. Sure, the process may not be as fun without the company of your friends, but at least your wallet will thank you for it.
And this may seem ironic, but shopping at bargain stores – like our favourite Daiso – can get much more expensive than expected. We’ve all been guilty of this: you think you’ll pop in quickly just to get a drink, and the next thing you know, you end up with a cart full of DIY household items and artsy decorations and titbits and…(you get the idea). Moral of the story? Just steer clear of those tempting $2 shop signs!
9. Avoid purchasing upgrades – get the most out of your tech
While doing research for this article, one of the common “pitfalls” we realised is that many of us spend a lot on technology, be it buying the new Samsung Galaxy S6 or Apple Watch or a powerful DSLR.
Considering how attached we are to our mobile phones and fancy gadgets these days, it’s not surprising that we feel compelled to splurge on such stuff. The problem is, while it’s tempting to buy the latest device when it comes out, it’s not financially responsible if you can’t afford it. After all, with new devices being launched ever so often, the iPhone 6 that you paid a whopping $800 for (excluding mobile plan and accessories) could become obsolete in as short as two years.
Instead, get the most out of what you have now. Continue using your current device if there’s nothing wrong with it. If you die-die feel like you want an upgrade of sorts, you could either download a software upgrade (if it’s available), or tweak with the wallpaper and settings to give your device a new look.
10. Remember that less is more
Last but not least, be appreciative of the little things in life. We know that giving up certain fun activities or hot commodities can make you feel a little deprived initially, but it really shouldn’t be the case. We’re not asking you to turn around your lifestyle completely; all you have to do is to change the frequency of your indulgences and savour each experience more.
For instance, if you enjoy going to the movies, try going twice a month instead of every week and focus only on movies that you really want to watch. Or if you know you have to save for an expensive upcoming trip to Europe, you can still dine out every weekend, but pick more affordable cafés to try.
With the right attitude, you won’t see spending less as “giving up” something, but rather as learning to slow down, pay more attention, and “savour” life more. And who knows, you may just end up happier and wiser for it.
Psst…Do you have any secret tips for spending less? Share with us in the comments box below!