This is the time of year you might be considering improving your finances or saving for something really special, like maybe a holiday, a house or a new car. Maybe you had a shocker in 2016 and really want to improve your overall finances in 2017.
Well, you wouldn’t be alone. For most of us, we are not happy with our financial situation, and we feel the need to improve it one way or another.
It might surprise you to know that the more you learn about the psychology of money, the better you can implement that knowledge to get ahead financially. Kabir Segal, neuroeconomist (and yes, there is such a thing), and author of the book “Coined”, explains that the effect of money on our brains is akin to the effects of cocaine!
“Neuroeconomists [scientists who research how the brain is affected by money] have performed several brain scans on individuals who were about to make money, and the results were staggering,” Sehgal told Time magazine. “The studies show that these people had the same neurological response to making money in their “pleasure centers”, as someone who was high on cocaine.”
And, if psychology plays a large part in our financial behaviour, it only stands to reason that we should use psychology to improve our situation.
In this vein, I’ve been collecting some money ideas for a while now that play on our psychological attitude towards this concept of money and its accumulation. Here are some that I found to be really nifty suggestions, not too hard to do for most, and which could make a little cash go a long way towards achieving your financial goals or at least improving your financial destiny in 2017.
(1) One idea from a friend of mine is to put away $1 in week one of the new year and then increase the dollars with every week – so that you save $2 in week 2, $3 in week 3, and so on. Or a reversal of this is possible too – saving $52 in week 1 and $51 in week 2, and so on. You’d be surprised how much you will accumulate by the end of the year and this strategy plays on the idea that it’s a game or challenge, so it becomes none too painful.
(2) Another nifty idea that is sound psychologically (and which I am trying myself this year), looks like it works a treat – it is via an app called https://acornsau.com.au – where you get to invest the small change from your daily purchases and see how your money adds up. You can also nominate regular micro-payments to be added to your account and of course, in addition you can choose to invest lump sums if you wish. It’s really a very clever, simple little concept which plays on the notion that we don’t notice the small amounts that slip through our fingers. The founders of this app recently floated it on the stock market, I believe, with share offerings to the investors who use it. This one could go a long way in the future too, with our fast-growing, cashless society and our ever-growing financially savvy population post-GFC.
(3) This next idea is a psychological ploy, where you trick yourself into thinking there is no such thing as a certain denomination within our currency system – say the $10 note, by way of example. (Although you could easily choose the $5, $20, $50, or $100 notes instead.) The idea is that whenever you get one of the said chosen notes, you stash it away and then they accumulate over time. I have done this before with very pleasant results at the end of a year.
(4) This one is an ancient tried and true method used by the wealthy. It is the principle “to pay yourself first”. This concept originally came out of a 1926 book entitled “The Richest Man in Babylon” by George Samuel Clayson, and it has had a huge impact on thousands of investors – the wealthy and wise. It means that before you pay your bills or anything else, you pay a small amount to yourself (like 10% for example), and that way, you will make sure that the most important person (you) gets paid every single time. The trick is to not touch the money and let it accumulate, with interest.
These are four of the money ideas I like most that use the power of psychology in the way we view money and our strategy for financial gain.
I am sure there are many, more worthwhile ideas out there … please do share any you think may make a difference to our readers’ finances. We are all keen to get ahead – aren’t we.