You are spending on stuff you don’t need leaving you with no money for want you’d planned. How do you slow down the burn rate? The answer is by getting to grips with the psychology of spending and creating some new approaches that will put out the fire in you wallet – slowing your financial burn rate in 7 steps.
1. Be the one that misses out
Having the latest item and keeping up with the latest fashion is a trick that’s been going on since Alfred P. Sloan ensured that each year there was a new Chevy model. To fight this you need to deal with the fear of missing out. You’ll have to reconcile yourself to being a little bit unfashionable and having last years model or older!
2. Add friction
There’s a lot of talk about frictionless spending. This is spending that is oh-so-simple and painless that you hardly notice it’s happened until you get that awful credit card statement. Whether it’s one click, contact-less or just tapping in a PIN there’s one well known and well proven method and that’s going to cash. Physically handing over the cash brings the reality of the spending before our eyes and will help put the breaks on.
3. Use delaying tactics
Avoid the trap of buying on impulse. Retailers are clever with their offers which trick us into buying now in the fear that their fantastic offer will be short-lived. Instead give yourself a cooling off period before you buy. Alternatively, you can give yourself some rules such as getting rid of something first before you buy or setting a limited storage space for items like clothes, shoes or books. No space, then no buying until you’ve done the clearance. There’s always an offer on somewhere.
4. Avoid the mall
If going to the mall is a major recreational activity then you’re just putting temptation in front off you. Go somewhere else, ideally somewhere where there is no admission charge and no gift shop. Play Frisbee in your local park or join a reading group at your local library.
5. Switch from spending to procurement
Notice at work that there’s no-one called Head of Spending but there’s someone called Head of Procurement? And notice the hoops these procurement types put you through when you only wanted to buy a box of pens? That’s because businesses hate spending as it reduces profit. So why not use the approach of procurement with you’re own wallet? You could get your partner to authorize any purchases in advance – this really helps if your personality isn’t s strongly conscientious one.
6. Get an alternative buzz
Spending creates a buzz. Maybe it’s the hunter gather instinct in us or maybe there’s something in the newly purchased item smell that gives us a high. Whatever the spending buzz is work on replacing it with something else. What about foraging for some wild food to get the inner caveman happy?
7. Have a compelling goal for your money
Could you use the money for something more important like training to help a career change or for a deposit on your first home. Put a note or picture in your wallet to remind you of what it is you really want to spend your money on. Every time you see the picture of, say, the great vacation location just remind yourself of the dump you’ll end up at if you spend the cash now.
Slowing your financial burn rate in 7 steps, remember: just miss out; add friction; add delay; don’t got to the mall; procure don’t spend; get your buzz elsewhere and have a bigger goal for your money……..
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