Convert spending into winning and trick yourself into saving

Money is inherently psychological. If we as a society lose our faith in our paper currency, it loses all its power and instantly becomes worthless paper. In a way, we only believe money is real because everyone else believes that everyone else believes it’s real. If you follow me.

But it’s also psychological in other ways. If we loan money to a friend, it immediately changes our relationship. We don’t feel that way when we loan tools or clothing. Why is money so different?

Fortunately we can also use money’s psychological powers in clever ways that become money-saving tricks. Next time you’re likely to make a mindless impulse purchase, try this trick out and let me know how it works. I do this from time-to-time and it helps me stay out of trouble.

The trick is this: convert the dollar amount you’re about to spend into money you just won or found. By employing this method, you can reset the importance of that money to your brain, helping you make different choices.

For example, say you’re about to blow $6 on a delicious, hot latte. Mmm, hot latte! Now, logically you know you’ll just be draining that latte into the toilet in about an hour, but oh, it’ll taste so good! But would you just throw $6 into the toilet? Hell, no! To resist the temptation, try converting the dollar amount in your mind to money you just found. Ask yourself how you’d feel if you reached in your desk drawer and found $6 you didn’t know was there. You’d be psyched! But by not buying the latte you’re saving the exact same amount! Remind yourself of the happy feeling when you find money and it’ll help you hold back.

Money can seem small or large depending on the context or price of what you’re buying. If you were buying, say, a TV, one unit might be “only” $200 more than the next one. You rationalize to yourself that it’s not much more to spring for the slightly better model. You whip out the card and make the purchase. But if you remember the exhilarating feeling you got last time you won with a lottery ticket* you can trick yourself into remembering what the real value of $200 is and restrain yourself. Congrats, you just won the lottery!  Or if you found $200 in an old jacket pocket. Would you be so casual about that?

Imagine a van pulls up to the side of your house one day and a guy runs up to your door to hand you an oversize check for $200,000! Wow, that’s a lot of money! What a great feeling! But by downsizing your house some of you might be able to get that $200,000 in your hands, but you ignore it. Don’t you want to win $200,000?

Pretty much the only casino game I’ve ever enjoyed playing is craps. It’s complex, fast-paced and I generally make some money at it. The fact that it’s relatively easy to walk away with cash is probably why it’s getting harder to find craps tables in casinos. Instead, the casinos are packed with slot machines which are very carefully designed to relieve idiots of hard-earned money.

One of the calls I’ve been procrastinating on making lately is to my insurance agent. I need to make several changes to my policies, but I’ve been waiting until I sold some real estate so I could do everything at once. I figure my family should be able to save $100/month once the changes are in place. That’s $1,200 every year! I would be psyched if I won $1,200 playing craps! That would be an amazing amount of money to walk away with! Yet, here I sit with my thumb up my butt waiting for the “perfect time”. OK, that’s it, I’m going to call today! See? It works!

What about you? Do you have any clever ways to trick yourself into saving? 

*I hope none of you have ever really done anything as stupid as buying a lottery ticket.

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10 Thoughts on “Convert spending into winning and trick yourself into saving

  1. Whenever I get a raise, I increase the amount that I contribute into my 401K. I continue to live on what I was living on. I guess I’m tricking myself by making me think I didn’t get a raise so I can’t be inflating my lifestyle.
    Andrew recently posted…Stay at Home JobsMy Profile

    • Pretired Nick on June 6, 2013 at 8:46 am said:

      That’s a really smart, approach, Andrew. Lifestyle inflation is the number one enemy of anyone trying to be financially free!

  2. This is a great way to think about things. I generally compare the money I’m about to spend to something else that I really like to buy to determine if it’s worth it. I really like Chipotle for $7, so that tends to be the normal comparison. I’ll ask myself if driving to so and so (and using $7 worth of gas) is worth a Chipotle burrito. Another trick I use is to compare it to how much I’d have to work (in hours) to pay for the item.
    Jake @ Common Cents Wealth recently posted…Photo Thursday: A Day at the RacesMy Profile

    • Pretired Nick on June 6, 2013 at 8:47 am said:

      Mmm, Chipotle! Converting the cost to hours (or even years) is something I do quite often as well. It’s a great way to ask yourself how much you really want it.

  3. I like this idea very much. Thanks for a new way of looking at spending that helps. I’m wondering if picturing the money flushing down the toilet is also helpful?
    Maggie@SquarePennies recently posted…Do You Want to Be a Billionaire?My Profile

    • Pretired Nick on June 8, 2013 at 5:25 am said:

      Thanks, Maggie! I hadn’t thought about the image of flushing my money down the toilet, but I think I’m going to start trying that!

  4. Love this, Nick! We always too, before spending, try to visualize ourselves literally throwing the money away, and it always makes us stop and think. :-). I read another post one time about a gal who said we should “view our dollars as employees” and that every time we spent one, it was the same as having one less dollar working for us. I loved that analogy!
    Laurie @thefrugalfarmer recently posted…Some Link Love and Some Farm WorkMy Profile

    • Pretired Nick on June 8, 2013 at 5:27 am said:

      The employees metaphor is a good one. I’ve also heard them described as soldiers. The ones you spend are the ones who didn’t come back!

  5. radiatta on June 14, 2013 at 3:24 pm said:

    4th of July is coming up. Let’s go light a $100 on fire and enjoy the show. My kids will forgive me someday for denying them firecrackers

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