October 2, 2013

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Why We Spend Too Much Money (And What To Do About It)

money saving

You’d think it’d be easy trying to save money on a tight budget.

After all, the logical thing to do would be to simply look at how much you have, deduct your expenses, and take it from there.

And when faced with the choice of paying rent or trading up to the newest iPhone, any sane human would clearly recognize a lose-lose situation when they see it.

Unfortunately for many of us, however, how we spend our money has less to do with calculating the future consequences, and everything to do with how our self-control and emotions interact.

Logic versus Emotion

Deciding whether or not to spend money is actually a battle between logic and emotion. Your impulsive side says, “Buy it – you’ll feel better!” Or “buy it! You deserve it.” Meanwhile that responsible adult voice kicks in, insisting, “But that’s your rent money!”

It’s a battle of wills, and often the impulsive side wins. Whether its because you’re distracted, feeling emotionally under the weather, or just plain short on time, you probably whip out your wallet more times than you’d care to admit.

Spend Less By Tricking Yourself

However, while it may seem like your rational mind shuts down when you need to make a responsible financial decision, there are a couple of sneaky tricks you can pull that will help you cut down on impulsive spending and stick to your budget.

Look for better values

People tend to stay with what they know.

In the financial arena, that means you may be spending more money on various goods and services, just because its easier than spending the time to find a better deal. I found this out myself when I changed grocery stores after moving to a different part of the neighborhood.

The closest store is conveniently located less than a block away. I was reluctant to shop at other stores, simply because it was easier and quicker than heading over to the store a few blocks away.

One day, however, I experienced a moment of fiscal guilt, and decided to check out the prices of the stores within 5 blocks of the other stores – and I was shocked at what I found. Prices between various products ranged from a 10% to 30% difference. I realized that I was losing quite a bit of money, simply because I was unwilling to walk to the grocery stores located just a bit further than my present one.

While you may decide that your time is too valuable to go from one store to the next to check out prices, there are a few apps that you use to help you find the best deal for what you want to buy.

Deals by CitySearch

The CitySearch app does exactly what it says: helps you get deals on products and services based on your GPS location. The app contains a wide variety of product and service deals, such as restaurants, groceries, pet supplies, automotive accessories, and more.

money saving

It also provides a map with directions on how to get to there; use the number given to call ahead to the business to make sure the deal is still in effect.

I Love Free Things

I Love Free Things, a website that gives you up to date listings of businesses who offer freebies, giveaways, and product samples, now has a mobile app for the iPhone and Android.

money saving

i love free things 2

There are a ton of categories to choose from, like books, DVD’s, beauty supplies, t-shirts, music, pets, health, money, and food. You can even save the freebies you like by starring them, so you’ll be able to take a look at each one later.

Weekly Ads and Sales

Why bother searching through local papers to find the best deals? Weekly Ads and Sales is a free  app that helps you find sales at more than 100 major retailers.

money saving

weekly ads and deals 2The ads look very much as you’d see them in your local newspaper. Easily add things to your shopping list with the “add to list” button, and call the store directly through the app.

How WishLists Save You Money

When given a choice, most people choose pleasure now, even if they know they’ll pay for it later. In fact, in a study by Read van Leuuwen (1998), 74% of people fruit when planning what to eat for the following week. However, when the same participants were asked what they’d prefer to eat at that moment, 70% chose chocolate.

We’re the same way with money – and marketers take advantage. How many of us buy a subscription “just to see if it’s any good,” but forgot to cancel it? And even though we know we’ll end up paying more, plenty of us fall into the trap of getting a great discount now, but paying for it later with steep monthly bills or hidden recurring charges.

money saving

Actually a briliant little way to get around this is to use the Amazon Mobile App. Not, of course, to empty your bank account with the one-click feature. Instead, you’ll use the little “add to my wish list” button to trick your mind into thinking you’ve got what you want.

Buy clicking “add to my wish list,” you’ve done two things. First, you’ve acknowledged that you want this cool thing, so that you don’t spend the next two days obsessing about it.

The second thing is that buy clicking the wish list button, it’s as if you’ve already “bought” that item. Partically that’s because clicking is an action, and our minds usually equate buying with action; when we don’t buy, we usually just walk (or click) away. Either way, you’ve taken away the desparate feeling that accompanies the feeling of “ I can’t have that,” and replaced it with a more positive one.

Monitor Your Self Control

Monitoring your self control is a good way of controlling how much you spend – if you know how to do it.

Keeping an eye out on your self control doesn’t mean telling yourself not to spend more than you have. Instead you need to keep track of your emotions, since the lower you feel the more you are to spend.

Remember the old adage, “out of sight, out of mind?” You can save yourself from impulse buying by only putting the amount of money you need for the day in your wallet, putting your credit card away in a safe place (instead of keeping it in your wallet and at your fingertips).

Getting rid of as many subscriptions as you can is also an excellent way to rein in impulsive spending. When you’re forced to buy individual movies at $1.99 that you have to pay for out of your pocket, you tend to watch only the movies you really want to see. Usually, that’s a lot less than a monthly cable fee.

Gym memberships are another good example of using only what you need. In general, people overestimate how much time they’re going to spend at the gym. Most people think they’ll end up going three or even four times a week, while in reality, the aveage is only one or twice.

If a subscription costs you $120 a month, but a day pass is only $10, then even if you go twice a week you still end up saving $80 – more than half.

If that isn’t enough, you can always join StickK. StickK is a free online community that helps you stick to your goals though a committment contract. Once you create a goal, you’re obligated to complete it within a specific time frame. If you don’t StickK will let you friends know about it.

money saving

If that isn’t enough to motivate you to complete your goal, you can also opt to put money on the line: Achieve your goal, and you don’t pay a thing. Mess up… and the sum of money you choose goes to a charity, or even a friend.

So there you have it: 3 practical ways you can use to control your spending. Do you have any tricks you use to keep things under control? Let us know in the comments below.

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September 29, 2013

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The #1 Habit Killer (and How to Beat It)

What makes it so hard to make habits stick? What makes you buy the Espresso and Cream doubleshot, check your email one last time, or down one more rum and coke – even when you’ve promised yourself you’ll do better next time? It turns out that there’s one simple reason why we find it so […]

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September 15, 2013

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Get a Better Night’s Sleep With These Apps

Sleep is such a basic need that without it, we literally become different people. Forget about being grumpy or out of sorts: lack of sleep can make you act like you’re legally drunk. Women who sleep less are more likely to gain weight, and too little sleep in both men and women can make you […]

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September 15, 2013

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How to Read Anything You Find Online On Your Kindle

read web pages on kindle

Wouldn’t it be great to be able to save anything you find online and read it later on your Kindle? There are a ton of services out there that let you save what you read and save it online: Pocket (formerly Read it Later), Instapaper, Readability, Memit, Keeeb, Mammoth and more. But needing to be […]

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