Save Money With Psychology

Adopting the right attitude to spending money can save you a fortune. It's a case of using psychological trickery.

If you sat down and tried to analyse why you bought this or that particular item, I wonder how much relevance you would place on outside influences, whether subtle or not.

To my mind, when it comes to spending money, the key question to ask oneself is 'Why?' If the expenditure can be properly justified and it's affordable or it comes under essential spending such as paying the mortgage, then I don't have a problem. It's when outside factors come into play that one can lose sight of good money management, so I've developed a few psychological tactics to help me be sensible with my spending.

Take that well-worn phrase 'Keeping up with the Joneses' for example. The phrase exists for a reason. We get envious of something our friend or neighbour has so we want one too -- preferably a bigger and better one! The trick I used to use -- I don't need to now because I'm much more practised at not feeling envious --was to tell myself that Mr and Mrs Jones were probably up to their eyeballs in debt. And quite often I would find out later that I was right (it's amazing what people will tell you when they're drunk at a party).

Another tip is to make a real effort to distinguish between 'needs' and 'wants'. If you always ask yourself whether a prospective purchase is one you really need or whether you just want it for the sake of it, you might find yourself keeping more of your money firmly in your wallet.

A classic mistake people make is going grocery shopping without a list and when hungry. Supermarkets spend a fortune trying to psychologically trap you into buying things you don't need -- the smell of baking bread, sometimes the gentle waft of soothing music and more often than not, the cheaper products placed inconveniently high or low on the shelves. I'm alert to these tricks now so I find it all quite amusing. So, eat before you go and make a list -- it'll help you distinguish between 'needs' and 'wants'. And I bet you'll find your shopping bill comes down.

By the way, it's not that I don't allow myself 'wants'. For example, I probably don't need any more clothes really but I allow myself to buy them whenever I'm in the mood from charity shops. It's cheap, it's green and my money is going towards a useful cause so it's a win-win situation all round as far as I'm concerned. I also quite enjoy saying '£3.50 from the British Heart Foundation!' in a triumphant manner when someone tells me they like what I'm wearing.

It takes practice to get the attitude right but it pays off. It's a case of learning to say no to yourself (and your kids!) once in a while or, in my case, making money-saving a serious hobby. I've learned to enjoy bargain-hunting, to look out for marketing tactics that might amuse me and to not give a damn about what the Joneses think of me!