The Psychology of Money

Money isn't everything, but it's everything status quo. Money is the reason you have to get up in the morning, the reason you go to work every day. It's what you use to determine if you have had a good day or bad day. For some, money is something they have and others don't. Over the years, A number of tools and techniques have evolved for getting more money. Working hard, working smart, banks, credit cards, bank loans, taking extra shifts at work, etc. The most difficult part about money is not how to get it, but how to keep it.

Money is like food. We all need it to survive. But we cannot live on it alone, and the same applies to money! Why do we try to gain more money, Why do we require more money? For a better life, self-fulfillment, or to win in competition with our peers or competitors... What's your reason?

Having enough money will give us freedom from unimportant worries. It is what the majority of people desire but only few achieve, but not necessarily a life free from worries. Remember I said unimportant worries right? Why you are wealthy, you don’t have to think about little things like what to wear, and the likes because you can afford those basic things but what about the worry of the fear of losing the money you have? That’s a serious one.

Saving money is important to stay afloat in the future

Today, most people are familiar with the idea of setting aside money for the future. It's a smart way to plan for your financial future, but how do you approach it?

The two common approaches to saving are to save regularly or to save up large sums of money. But how do these two approaches impact how we actually save and spending money in the future?

A 2017 study published in the Journal of Consumer Research found that the way in which you set aside money matters. The study found that if you're planning on using it in the near future, people set aside larger amounts earlier on in their savings.

Problems arise when people feel like they will be able to access the money at a later time, as they spend that money as easily as they would spend money from a checking account. This is because they already see the money as accessible, even though they have never spent any.

The opposite happens if you wait to save up before spending. According to the study, you will be more likely to spend your saved money if you've saved it away for a long period of time. This is because, psychologically, you will have a longer delay between your intention and the actual action. So this means that people prefer to spend up front, rather than saving money for later.

A lot of excuses arise when we try to save money, some say the need to have a lot of money before they can save. But according to Morgan Housel “Increasing your income is  not one of the most effective methods to boost your savings. It's to make you more humble” Saving money is very important. However, what is even more indispensable is how you use your saved money. For example, if you find yourself always worrying about money and wondering if you have enough, then it is time that you start changing your thoughts to change the way you use your money. This will help you save more and keep your mind in a better place as well.

We could all use a few more pennies in our pockets and this is where humility comes in. Humility helps us be realistic in our expectations, therefore better prepared for any life challenge (and we all have them). It keeps us out of debt by preventing us from trying to keep up with the Joneses, because we remember they're broke. If a friend starts bragging about how much they make, you can say "I know", although you don't know.

When you're humble, you don't need to make big purchases or buy big houses or cars. You don't need to impress anyone because you are already impressed with yourself and your own achievements. You won't be as worried about how much you don't have because every penny saved is your little victory. Being humble around money not only increases your savings rate, but it gives you a lot of perspective in life.

The bottom line: Humility helps us save more money and saving helps us to be better prepared for the unexpected- the future.