There are many things that can affect our ability to save money, or not go over a budget that we set ourselves. We set our budgets, determined to keep to them, but there are some things that make us go over it again and again.
Some of these factors might be things you have never even thought about and might never come to think about. Here we analyser some of these factors that influence our ability to keep to a budget and to save money.
For a start, there is the language we speak. It might seem odd, but there is a distinct link between the language we speak and our ability to keep to a budget. Behavioural economist Keith Chen was the first to make the link between people speaking certain languages and their ability to save money.
He says that “futureless languages” mean the people speaking them have better skills at saving. In English, there are endless tenses to give a distinct timing to a verb. In Mandarin, Japanese or even German, there is far less room to express differences in time through this means, and it seems to lead to the people in the countries where these languages are spoken being better at saving money.
The theory is that when you do not mentally consider the future as an abstract thing, you are better able to consider it. If you speak multiple languages, you might want to consider thinking about your finances in a language that does not allow you to do this.
Another point that can lead to your being less able to keep to a budget is the length and quality of your sleep.
We all know about not going to the supermarket when hungry, as it leads to impulse buying of groceries, but sleep is just as important a factor as hunger or thirst. When you do not sleep well, or do not sleep enough, you are more inclined towards making impulsive, and perhaps riskier, decisions.
When you are sleep deprived, the area of your brain that predicts outcomes of what you do is more inclined to see positive outcomes. The negative impulse declines and the positive impulse increases, thus leading to risky and impulsive spending.
Without sufficient rest, you are also at risk of losing a bit of willpower. You are less able to resist impulses and let yourself slide into temptation. This would include doing things like going out to eat, rather than cooking a dinner at home, just because you can and want to.
And of course there is one last part to this, which all Singaporeans can relate to. When you are tired, you might be more inclined to sleep in. This then means you have to travel by your own means, using a car, or worse, calling a taxi. This is always more expensive than taking public transport.
Then there is the way being thrifty actually does not always mean you are saving money. When you buy at a discount or use a coupon, that is not the same as taking money and putting it aside. Often we think we save S$10, only to spend that money we might potentially have saved on something else, or on buying more of the same thing. If we save the S$10 and then take that saving and put it aside, we have actually saved it, but few of us do that.
The way you dress can affect your ability to save money too. It might sound even stranger than some of the other things mentioned here, but there are studies that have proven exactly this point.
There is an old trick of pretending to be someone changes you into that person, or repeating a phrase to yourself often enough, seem to also work for seeing your reflection in the mirror.
If you dress well, as someone able to manage something, someone who can think in abstract ways, you are actually better at these things.
The opposite is true too. When you dress down and look like a slouch, you are more inclined to behaving, and thus spending, like a slouch.
So when you dress well, you are better able to judge your purchases. You are less inclined to fall for a smooth piece of marketing and more inclined to look at actual savings.
In the end, it might be worth putting on a suit and tie when you are looking through your finances and deciding what to spend on or invest in. Or when you sit down to look at the details of your mortgage.
A final point that affects your ability to save are actually your own personal insecurities.
When you are feeling insecure, when you suffer from a lack of self-esteem, you can be more inclined to spend money. You might want to spend the money on a new pair of shoes, or a new dress when you have suffered heart ache. These actions give you a boost, a surge of positive emotional feedback, which makes you feel better.
One reason for this is because a crisis, emotional, physical or even potentially economical, triggers our primitive instincts. We go into survival mode. The most typical way this manifests itself is to eat more, letting the body store energy for the coming crisis. Unfortunately this does not work the same with finances. Following that impulse leads to your budget being blown very quickly.
The way to deal with this is to find another way to deal with this crisis. Sports are good ways to do this, meditation, art or religion are other ways people can deal with a crisis in more positive ways than to spend their way out of their depression or insecure moments.
All in all, there are many ways that our behaviour and the world around us influence our ability to keep to a budget. From language and clothes to how we deal with stress and how we sleep, it all matters when it comes to making financial decisions. But strange though some of these things might seem, taking them into account, or changing some of our habits might do wonders for our ability to save money.
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