Saving and spending seems to be something that any college student would be willing to do. Make that a college student with a 16-month-old at home (that’s me!) and you will scour the internet for anything on how to spend less and save more. Part of my weekly routine before grocery shopping is looking at grocery store flyers to see which store has the cheapest berries (my daughter’s favorite), where I can buy organic and not the break the bank, and where I can get chicken and ground turkey (a Ware family staple) cheap by the pound. Spending less and saving more seems simple enough; just spend less on what need and you will save more in the long run. However, as “Want to Save more? Try Making It Automatic” tells us, “the field of psychology has shown most of us tend to overvalue the short-term over the much hazier long-term.” As the article states, this explains why we choose to eat the chocolate cake now and not think about improved health, or why we choose to splurge on something now, rather than saving for later. Having to think about willpower can become useless, especially if willpower is what we rely on for long-term decisions. So, does my daughter really need another cute set of pajamas? Does my husband really need more socks (he’s really particular when it comes to socks) even though we just bought some last week? Or do I spend less by not getting useless things so that I can save more for the future? How can I not rely solely on willpower to make this happen?
So, what does this have to do with cognitive psychology? As cognitive researchers and behavioral economists have discovered, “we set ourselves up for more cognitive fatigue if we have to make a choice to, say, spend less and save more—repeatedly.” It is simply taxing for our brain to have to make the conscious effort to make short term decisions repeatedly. Instead, they suggest different long-term techniques we could apply when making the decision to save more. Interestingly, they suggest that one should adopt “a plan that sets you up for repeated saving or spending.” All of these saving techniques deal with boosting contributions to retirement plans and 401(k) plans (something I am not a pro at) and the spending less techniques deals with examining your habits. Think about what you are spending extra money on. First, do not eat out all the time. Cancel the recurring monthly charge of $1.99 for those magazines you don’t even read. You don’t need to buy another pair of headphones because you think you “lost” your other pair. Second, stay away from the word upgrade. This is just a ploy from tech companies to get you to buy even more expensive junk. And most importantly, if you are really thinking of spending, go and shop for something in person. You become more aware of what you’re purchasing and for how much. Shopping on line makes it easier for you to just click it and forget it.