Happy pay day folks. We all deserve that special treat because we have made in January. This is a special Friday. That is probably what your mind is telling you right now. Most of us tend to spend money on pay day without feeling the pain because our brain has already registered that we have tons of it in our account than we had 24 hours ago.
Your brain was never wired to deal with money, hence it could use a little pushing and here is why. These are some of the behavior concept that you brain tend to lean on.
- The anchoring problem. Have you ever gone to a restaurant without ever having an idea of how much a meal is likely to cost? How then do you decide if the price you are paying is not overpriced? your brain is likely to take the first price it sees, and without any knowledge assume that is just about right. With this kind of mentality, if a restaurant was to charge N$50 extra, you will end up paying anyways caused your brain thinks that price is right. But if you had a budget of how much you are prepared to spend, you can make a conscious choice to go to the next restaurant that is within your price range.
- Instant gratification- your brain is wired to value something now more than in future. That is why we end up buying things on sale or making impulsive buy. To give your brain a little push, delay buying something for 24 hours or a week for bigger items and see if you still really need it. You lived just fine without the sneakers now it is convincing you of all reasons why you need it.
- Different type of money – A dollar is just a dollar no matter how you got it. But your brain does not think like that. It categories money into different types of money and some it put in the category of special money. You are likely to spend your bonus, gift money or overtime money on unnecessarily things because your brains tells you that its special. To overcome this, include it in your budget and just like your normal salary, a portion of it, if not all should go towards savings.
- Herd mentality – This is how most of us end up poor. We value items highly because others value it. We do not even stop to think whether we really need it and what sort of improvement it will bring to our lives. Shape your life, know what you want and your brain will snap out of this.
Given all that, you need to be a little more deliberate about the money decision you make and train your brain to think in the right manner.