You’re at the mall and pass by an electronics store when you remember that your phone charger is starting to fall apart. So you walk into the store to get a new one and stop dead in your tracks — the latest version of your phone is on sale. You pick it up and notice that it looks almost exactly like your current phone, except it’s lighter weight and comes in gold. You didn’t realize how much you wanted a gold phone, but now, you can’t imagine life without one. You head to the checkout counter, excited about your new phone and all of the money that you saved. By the time you walk back to your car, you realize you never did buy that phone charger.
Have you ever bought something from a store that wasn’t on your list? You’re not alone. In fact, 54 percent of consumers have spent $100 or more on impulse buys and 20 percent of us have spent at least $1,000, according to a 2016 report by CreditCards.com.
Modern society embraces instant gratification. As a result, we often connect the action of spending money with feelings of acceptance or admiration. This can make saving difficult at times, but it’s key to financial well-being. Find out how you can train your brain to overcome instant gratification, and save up for the things you really want.
1. Identify your “why.”
We each have a unique reason “why” we want to become smarter with our spending. That reason acts as our intrinsic motivator, helping us overcome obstacles and continue to push toward our savings goals. Maybe you want to pay off your student debt so that you can make room in your budget for travel. Or perhaps you want to set aside money from each paycheck to save for your child’s college education. Take a moment to brainstorm and write down your personal “why,” and then post it somewhere that you are most likely to see it — your kitchen, bedroom, or car. Share your “why” with others, such as a spouse or a friend, who will help to hold you accountable to save toward your goals. Then revisit that reason weekly to stay motivated.
2. Visualize your financial freedom.
The best way to achieve financial independence? Start with the end goal in mind. Visualize what small steps you could take to make a positive change financially. What would this look like and what value would it bring? Maybe you see yourself spending less time on social media, to avoid the temptation of buying the latest tech gadget or taking an expensive vacation. The time saved from browsing your newsfeed could be spent getting together with family and friends, and the money saved could bring you closer toward your goals.
3. Assess your current spending.
Research shows that roughly 45 percent of the choices you make each day are habits, according to “The Power of Habit” by Charles Duhigg. Those habits allow you to go into “auto-pilot” during routine tasks so that you can save your conscious reasoning for new decisions. Building awareness of your current habits can open your eyes to small changes that could lead to greater financial health. Take a step back and think about what triggers you to make an impulse buy. For example, maybe you check your email, see a sales alert and then suddenly find yourself shopping on the retailer’s website. A simple shift to avoid the temptation would be to “unsubscribe” from future email sales alerts or text messages.
4. Adopt smart spending habits.
Thomas J. Stanley, author of “The Millionaire Next Door” and “The Millionaire Mind,” made a name for himself by studying and writing books on America’s affluent population. In his study of self-made wealthy individuals, he found that they shared several commonalities. First, they lived well below their means, even after accumulating wealth. And second, they prioritized their goal to be financially independent above their need for social status. They understood that spending excessively today could jeopardize their financial security tomorrow.
Avoid the urge to splurge:
- Track your current spending through a free app, such as Mint.
- Set a monthly budget with a strategy for saving.
- Pay in cash, when possible.
- Save up for the things you want before you buy them.
- Wait a day (or several days) before making a big purchase. If you still want to make the purchase, save by finding an older model or a gently-used version.
5. Hold out for the second marshmallow.
Psychologist Walter Mischel, PhD, once led a simple, but effective test on the self-control of preschoolers. It was dubbed the “marshmallow test,” and it gave young children very simple instructions: You can have one marshmallow now or two if you wait. But the study didn’t end there. Years later, he revisited those same test subjects as teenagers and found the ones who waited scored higher on their SATs and were more likely to be described by their parents as having the ability to plan, manage stress, respond to reason, and exhibit self-control in frustrating situations, according to the American Psychological Association.
When we give in to instant gratification, we might feel satisfaction for the moment. But if we’re patient, strategic and focused, we could earn an even greater reward: financial freedom.