One of the biggest factors in effective money-saving is also one of the least talked-about. And that is psychology. For some reason, many of us don’t think about our finances from a psychological perspective – but in many cases the state of our finances can also be a manifestation of our approach to life.
Exploring the psychological aspect of your money habits won’t just help you find ways to save – it can also give you new insights into what motivates you in life generally, and hopefully help you look at things from a new perspective.
So, how can you go about using psychology to help you save money? We’ve put together this short guide to outline a selection of the main things to consider.
1. Be aware of shopper psychology
Big retail environments are very interesting places to be. Look at the floor layouts, the shop window merchandising, the lighting, the store signposting. It’s not chance that makes them like this, of course. Big shops – especially supermarkets – are designed to invite you to buy stuff.
As money-saving shoppers, it’s imperative that we’re aware of the distinction between the things that look great (and well-priced) in store and the things that we actually need!
All of which is part of an important process – seeing shopping as a skill. And like all skills, it’s one that we can all seek to improve no matter how good we already are.
2. Identify your irrational shopping urges
I don’t know about you, but I’ve never gone into a supermarket and bought an excessive amount of onions (as much as I love onions!). However, I wish I could say the same about knitwear. There are times I have been in a department store, so tempted to buy a new expensive sweater that it’s almost like a supernatural force is driving me to buy it. But I have learned to resist.
So here we have the difference between a rational and an irrational shopping behaviour. I buy exactly the amount of onions I am going to need, yet I feel an urge to buy as many expensive sweaters as possible. There’s a telling element of psychology right here – perceived value. The irrational part of me wants to hoard a load of expensive clothes, simply because they’re expensive. So by going on shopping trips armed with that knowledge, I can identify the urge and deal with it much more easily. And as a result I’ve become almost resistant to the impulse buying that used to bedevil my finances.
3. Shop with purpose
Going shopping shouldn’t mean putting yourself in the way of too much temptation. One way to avoid this is to visit smaller, specialist retailers where you’ll find what you need, without having to walk through aisles of alluring inessentials on display as you make your way to your target purchase.
Shopping locally can be one way to help keep distraction away – and recent figures show high loyalty towards local business, so it could be the start of something beautiful!
4. Trading down comfortably
For just about everything we buy, there’s likely to be a cheaper version out there. So, one obvious way to save money is to trade down.
It would be too much of a lifestyle change to trade down on everything. A big forceful change like that often means that we feel uncomfortable and out of place – soon returning to old behaviors (and therefore changing nothing).
So the trick with trading down is to do it piecemeal. Find brands and products that cost less, and try them out. If they’re not to your taste, go back to your usual one. It’s not about self-denial. It’s about getting the right products at the best price.
Identifying your impulse buying triggers and being mindful of your surroundings can help save you money every time you go shopping. While it may only be a small amount it can quickly accumulate over the course of a few months, and you may find your bank balance considerably more healthy in a year’s time!