How To Nudge Yourself Towards Spending Less In Only 7 Days
Nudge Theory (yup, that’s a thing) holds that you can influence people’s decisions by making it easier or more difficult for them to choose one option. If you want to encourage your kids to stop leaving their toys all over the living room floor, for example, you give them lots of storage right there. If you want to stop yourself eating high calorie snacks between meals you stop buying them and buy rice cakes instead. And if you want to stop making the wrong spending decisions you need to set up systems to make it less easy to make the wrong decisions and more convenient to make the right ones.
Two years ago I needed nudging. I needed to stop going overdrawn without realising it and incurring charges. I needed to stop missing payment deadlines for bills and incurring charges on these too. I needed to stop spending more than I meant to without even noticing it, leaving me wondering where it all went. I needed to stop spending till the money was gone with nothing left over for things we really needed, or to put some into savings.
So I spent a week giving myself a nudge in the right direction. And, slightly to my amazement, it worked.
One Week To Take Control Of Your Spending Habits
Here are the seven little nudges that helped me keep my spending under control. You can do them all in one go, or make life easy on yourself by taking a few minutes each day to do just one of them. Either way, by the end of this week you could be set up for saving without any effort.
Day 1 – Set your bank’s website as your computer’s homepage to nudge you to check your bank balance daily, as soon as you go online. And then do it. No more fees for accidentally going overdrawn. And if your bank has an app, download it so that every time you waste time idly looking at your phone you are nudged towards checking your balance.
Day 2 – Set up standing orders or direct debits for areas of your budget that can be paid in one go and that come up every month. Set them up to go out of your account as soon as your pay goes in and you won’t ever have to nudge yourself towards remembering to pay them again. Standing orders are the king of nudges.
Day 3 – Put your plastic in a safe place AT HOME and go cash-only. This will (hopefully) make it too inconvenient to have to go home for your card and back to the shops thus nudging you away from impulse-shopping. Scary but effective.
Day 4 – Lift cash for each budget area and put it into separate purses. This will nudge you towards setting aside enough for all the things you need and away from spending the lot on things you want. Obviously this requires you to have a budget in the first place – if you don’t already, make one now. It doesn’t have to be complicated – try this one from Diary Of A Frugal Family.You don’t have to spend lots buying separate purses – cheap plastic pencil cases and a bag of budget key tags works fine.
Day 5 – Set up at least one separate savings account and then set up a standing order to pay into it as soon as you get paid each month. If you wait till the end of the month to see how much is left over for savings there will most likely be nothing. But if you set up your bank account to remember to put savings aside you will treat that as money you never had anyway and just cope without it. What do you want to save up for?
Day 6 – Set up an admin kit of envelopes, cheque book, pens and stamps as near to where you open your mail as possible to nudge you to deal with mail as soon as you open it: no more paying interest on bills you didn’t pay on time.
Day 7 – Set up a filing system for all your financial paperwork. My lack of a decent filing system (it was more of a piling system) was nudging me away from, for example, going through my energy bills and finding a cheaper supplier. Once I sorted that it was easier to start reducing our bills in a whole lot of areas. A filing cabinet is great, but a folder with pockets works just as well for financial admin. Frankly, even a row of labelled clothes pegs on a string hanging between two drawing pins is better than nothing. My papers were all jumbled in a cardboard box: I don’t recommend this. Get a system that works for you and spend an evening sorting out all your papers. It won’t be your most exciting night ever, but it will make you feel on top of all your finances. Which is the point.