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3 habits that actually cause you to spend more money, according to a behavioral researcher – CNBC

Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

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Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

When it comes to managing your finances, you can set out with the best intentions but still make mistakes because, well, you’re human.

Maybe you feel discouraged when you make a budget but overspend anyway. Or, you tell yourself you’ll only order one glass of wine at dinner with friends but end up drinking three instead. You might challenge yourself to save $50 every month, but find yourself with only $25 in savings once you pay your bills.

In these scenarios, our psychology may have a hand in why we spend more than we intended to — and understanding our thought processes might even help us develop a personal system to avoid overspending.

Select spoke with Mariel Beasley, the co-founder of Common Cents Labs, who broke down some habits that lead us to spend more money and what we can do to avoid them.

Habit #1: Relying on willpower to restrict our spending

“Motivation, like anything else, ebbs and flows,” Beasley says. “So if you’re relying on sheer willpower to prevent you from making purchases, it’s going to wear down over time and won’t always be effective.”

One of the ways we seek to restrict our spending is through budgeting. Creating a budget can help show you where your money goes, but people have a tendency to fall into a cycle of overcompensation when they’re trying to curb their spending.

They’ll stick to their budget and spend less one week, but then the following week they’ll actually overcompensate for their lower level of spending and go over budget, says Beasley. And once they realize they’re over budget, they’ll reduce spending once again to fall under budget — and the cycle continues in this way.

That’s not to say that you should never look at a budget again, but this cycle can be very draining and make you feel as if you’re constantly taking one step forward and two steps back.

“Budgeting is effective as a one-time thing, like for Christmas shopping or going on a vacation. But long-term, it is not effective because it makes people feel bad when they don’t hit the budgeting goals they set for themselves,” Beasley says.

Habit #2: Focusing more on immediate satisfaction versus long-term benefit

As humans, we’re biased toward our present selves and obtaining the things we want right now. But often times, that instant gratification means that we’re putting less emphasis …….

Source: https://www.cnbc.com/select/psychological-habits-that-actually-cause-you-to-spend-more-money/

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