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The Psychology of Self-Control and Finances.

“I’ll start saving tomorrow.”

Many financial decisions follow this very statement. Our lives are busy, and it’s often difficult to calculate what will pop up from one day to the next. Is it useful to spend the money now, or later?

An individual’s financial stability starts with a conscious effort to control spending and save for the future. Problem is, at the moment, “useful” could mean how happy you will be once you buy the product. Let’s be honest here, saving for things like retirement doesn't exactly make you "happy" and it's easy to get caught up in what you enjoy more.

But how does a person exercise the self-control?

Something to keep in mind is reason versus emotion. If there is something to draw from past experiences, it’s that distraction, sadness, and accessibility can make us more willing to dig into our pockets. Distraction because we’re often sucked in by those “incredible deals,” and sadness because sometimes we buy things to feel better. As for accessibility, money comes in many different forms, and the instant gratification that comes from swiping a card can hinder your ability to consider how it will affect your budget.

Recognize these situations, and learn from them. Don’t beat yourself up if you make a mistake, instead just move on. Here are some tips that will help keep your hands out of your pocket:

1) Don’t purchase on impulse: Do you have to have it right now?

2) Needs vs. Wants: Is it something you need, or something you want? Can you put it down and forget about it before you leave the store?

3) You are who you hang out with: Surround yourself with people who are financially responsible, or at least understand and respect your decision to save. Self-control will be very easy if you see that others are doing it as well

Posted: 5/30/2013 with 0 comments

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