Mind Over Money
Look at the big picture
A study published in the Journal of Consumer Research found that people’s estimations of their spending was off by up to 40 percent when budgeting by the month, as opposed to 3 percent when budgeting for the year. It seems when we look too closely at our budget, we may miss irregular expenses or bills that only turn up every quarter or annually.
Consider starting your budget with a big-picture perspective on your expenses for the year, then break it down from there to make sure nothing falls through the cracks.
Get back on the wagon
Another study in the Journal of Consumer Research found that when people don’t achieve their budgeting and spending goals, they can experience a feeling of failure that may lead to more indulgence, leading them further and further from their goals.
Like any goal, you may experience times where you fall off the wagon. The important thing is to consider how and why you strayed from your goals, so you can return to your regular routine quickly and stay on track to achieve your savings goals.
Think of extra money as a ‘rebate’
A Harvard study found that the words you use to describe extra money may affect how you spend it. Participants who were told an extra $25 was ‘bonus income’ spent four times as much as participants who were told it was ‘tuition rebate’. If you view extra money, such as tax refund or income bonus, as being a rebate rather than free money, you may be more willing to save more of it.
Make it a treat
Harvard Social Psychologist, Michael Norton, says one of the easiest things to do to create a healthy budget is actually free: take a break from the things you really like.
“If you always have a certain thing every single day, give it up for a day. You’ll save money, which is a good thing, but you’re also going to enjoy it way more tomorrow,” he said. “This is a really hard one for us to deal with, because we always want that amazing coffee. But it is empirically true that if you stop for a few days, the coffee you have on Friday will be way better than the ones you would have had in the meantime.”
What tips do you use to maintain a healthy budget?