Spending temptations are everywhere, and it’s easier than we think to give into them. If you’re looking to put an end to your impulsive spending, try this trick: every time you give into a splurge, put that same amount in a savings account.
Fist of money image via Shutterstock
The Motley Fool explains:
Inundated by these opportunities to spend, skew the act of spending to your favour. So you want to buy those new boots? Match that spending with an equal contribution to your down payment.
Sometimes the pain of doubling a cost is enough to deter a purchase. In the case you still choose to spend, the matched contribution ensures you’re at the very least taking measures to save.
I like this rule because, either way, you win. You either forgo the splurge because you can’t afford twice the amount, or you give in and beef up your savings in the process. Also, if you make it a rule, it forces you to take an extra moment to think about your purchase, and mindful spending is a good thing.
There are potential drawbacks, of course. You might end up saving your splurge amount only to realise your everyday transaction account is dangerously low. You obviously want to use the rule using your own discretion.
For more detail, check out the full post at the link below.
How to Trick Your Brain Into Saving a Down Payment [The Motley Fool via Fidelity]