Savings: Five psychological tricks to managing money – life and savings

Overdrawn account, unpaid bills, big purchases on the way? Almost everyone knows money worries, quite a few of them keep them awake. For lack of money often also means concern for children, standard of living, what family and friends think about it … How do we develop a healthy relationship with money?

Important in advance: If you have stress with your finances, you must of course find out the cause of the money problems. If you are picking up unpaid bills, it is best not to stick your head in the sand and just leave the envelopes unopened. It does not make the money problems go away.

But if you are worried because there is still a month left when the money runs out, the neuroscientist Prof. dr. Mira Fauth-Bühler * five smart psychological tips for a healthy relationship with money and how to make more informed financial decisions.

Prof.  Dr.  Mira Fauth-Bühler, neuroscientist and professor of occupational psychology and neuroeconomicsFoto: Liebmann-Decombe/obs

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Prof. Dr. Mira Fauth-Bühler, neuroscientist and professor of occupational psychology and neuroeconomicsPhoto: Liebmann-Decombe / obs

1. Do not act when you are in a bad mood

Everyone knows it: impulse buying on a whim to do something good for yourself because things are not going well at work or things are tough at home. All too often, we regret these purchases immediately afterwards. The gadget collects dust in the closet, the clothes and the price tag just get stuck after unpacking.

According to Prof. Fauth-Bühl, these situations are most likely to occur when we are in a bad mood or stressed. Both scenarios often end in impulse buying and questionable financial decisions. The scientist: “The control system in the brain, with which we achieve long-term goals, plan our finances, delay rewards and resist impulses, is neglected. Instead, the reward system takes over and demands the instant gratification designed to make us feel better.”

Two pairs of shoes for the price of one? Sounds tempting – the money is still gone!

2. No stress shopping

Time pressure is the enemy of rational thinking! Fauth-Bühler: “If we do not have time to consider possible alternatives and consequences, the reward system will take over.” And it is not only responsible for maximum satisfaction. It also triggers old habits. The result: If you find yourself in a similar situation two weeks later, you are likely to repeat this behavior.

A first but crucial step towards using more consciously: Pay attention to your patterns. Fauth-Bühler recommends: “Identify the triggers (eg sales season) and situations (eg a shopping trip after an unpleasant day) that make you spend money impulsively – and try to avoid them.”

Do not pay for everything with a card

Surveys show again and again that when we pay by credit card, we think less about the price and no longer associate shopping with payment. Our brain directly connects the withdrawal of the money card with a reward.

A conditioning that we pay dearly for!

4. Do not set unrealistic savings targets!

Money management cannot be changed from one day to the next. One mistake: too many or too unrealistic savings goals. Prof. Fauth-Bühler: “Trying to control too many impulses at once increases the risk of failure – leading to a possible bad purchase, which you later regret.” She recommends instead breaking down savings goals into smaller milestones and breaking them down, if possible, to formulate specifically.

Benefit: You can develop a saving behavior and make it a habit based on the reward system and – because it happens automatically – requires less effort and energy. This removes the pressure from active thinking and saving decisions.

Human brains are not designed to save or make wise financial decisions. Prof. Fauth-Bühler: “Instant gratification is simply closer to us than waiting – and thus than saving or investing money.” The psychologist suggests: “Define your long-term financial goals.” Savings are automated, for example amounts in sub-accounts are set aside regularly and automatically.

The key, according to the expert: “Achieving goals leads to an instant sense of satisfaction. Because of a process of positive reinforcement that leads to an outbreak of dopamine, we are more likely to repeat the behaviors that led to that success. “

In the end, you are better off with your own finances because you associate the positive emotions of a successful savings with it.

5. Control over one’s own environment

It can be that simple: A day in the woods or in the park helps save! For example, if you go for a walk in nature, you do not spend the day in the mall. The buying impulse that you may not be able to resist does not even occur.

And what about online shopping?

When it comes to ordering and paying for a laptop or smartphone: make it as difficult as possible for yourself!

Do not save card data, personal information, passwords for online stores, disable automatic payment features. Anyone who has to look for the data and type it in every time quickly gets so annoyed that the new sneakers might not be that nice anyway and the cell phone on sale is not cheap enough.

* Mira Fauth-Bühler is Professor of Occupational Psychology and Neuroeconomics at the FOM University of Applied Sciences in Stuttgart. As part of a savings survey from Mobilbank N26 gives tips on how to save.

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