Think Things Through
Farnoosh Torabi, author of Psych Yourself Rich, explained a few mental approaches on Huffington Post. First is to give serious thought to your purchase. Pressured? Rushed? You’ll spend more recklessly. Infomercials are designed to take advantage of this brain quirk.
Saving Money is Relative
Duke behavioural economist Dan Ariely says we’re bad at making comparisons: We may readily pay $3,000 to upgrade to leather seats in a new $25,000 car because it’s a relatively small percentage of the total price, but we’d think a lot longer about paying $3,000 for a new sofa that we’d sit on every night.
Automate
Ramit Sethi, who runs the website I Will Teach You to Be Rich, gave some tips on increasing willpower (financial and otherwise) to the Bucks blog of the New York Times. Key? Pay bills automatically to avoid late fees. Similarly, channel a portion of your paycheck to your 401(k) and savings accounts.