Simple money saving tips: The psychology of saving

We know that personal finance and general money management is something we want to and all should be better at.

I mean money apparently makes the world go round, so it seems beneficial to explore how to do more with it without having to work 4 different jobs at one time.

Here’s a compilation of several basic tips that might just help you better manage that hard earned cash.

Buy in bulk 

This was a tip I actually came across from Mark Cuban in a short clip. He referenced his die-hard approach of buying items in bulk, even today, due to the fact that this normally results in decent sized discounts.

You might think that buying one of a certain item only at times you need it is smart. But, what if you’re buying that multiple times a year and spending more than you would have if purchased in bulk.

Companies are good at marketing products to make you steer away from bulk buys, so think differently the next time you need to buy staple products like toothpaste, body wash and similar items.

Get clear on your current in’s and out’s

The best place to start with any money saving strategy is knowing just how much you have coming and going right now.

I’d recommend spending a little time on centralising your activity on a simple budget spreadsheet. You can use this to visualise how much is coming in every month and where it goes out to.

This is a simple but effective tool for you to understand how you’re spending your hard earned cash.

With this you can uncover where you could make some changes to save a bit more cash and potentially divert this to savings or investments. I would say having a basic budget tracker is non-negotiable for most of us.

You’ll find in the long term that this will be an efficient time and money saving investment that requires no more than a few hours of investment a month to maintain.

Know the difference between a want and a need

You might like that shiny new toy but do you really need it?

This is something we all struggle with - determining a want and a need. Times of mass sales are when the struggle is most real. Seemingly too good to resist offers everywhere for high-end goods that prey upon the dopamine rush flowing through our brains.

But, do you actually need any of it?

What we need to do is one, breathe, two, step back and three, ask yourself “What’s wrong with what I currently have?” Yes, a new super sized TV with 5 million features looks tasty. 

Yet, what’s wrong with the trusty set-up that’s been working fine for the last 6yrs? Probably nothing.

This is a choice we all have to make: continue to chase the thrill of new gadgets at supposed cheap prices (normally they aren't) or make a decent investment up-front and have something that can last perhaps a lifetime.

This brings me onto my next point.

Buy better

You might think that purchasing an item because it’s x amount cheaper is saving you money. But do you consider how long that item might last?

A common trap we often fall into is that of buying something because it’s cheaper than a vastly more expensive version on the market. Yet, what we mostly discover is that the cheaper item is of such low quality, we end up making multiple purchases of the same item several times in a short period which totals more than the cost of the more expensive version we deemed not affordable.

Let me use an example to demonstrate this.

I love converse hi-top sneakers but used to be put off by the $80 price tag. I couldn’t understand why people would pay so much when there were exact replicas for $30-$40 less at other stores.

I found over the years that identical looking shoes I wore at the cheaper price tag wouldn’t last that long. Sometimes 6 months, sometimes less, and then they’d start to fall apart.

Still, I continued to purchase several pairs a year over a number of years to replace each worn out pair.

Eventually, I came to the realisation one summer that I had probably spent more on replacing the cheaper quality but identical looking shoes than I would have on the high-end version.

Actually after a heart breaking set of calculations, I’d discovered I’d spent nearly 3x the price of the high end version on the supposed cheaper alternatives.

So, what happened?

Well you can bet I stopped buying the cheaper but identical looking products. Instead, I opted to try out the real thing, and you know what? 7 years later, I still have that same high-end pair. 

No replacements necessary and $80 over 7yrs is a yearly cost of approx $11 - that’s a lot better than my $50 plus spend per year on the supposed cheaper versions.

The point is this - buy better. Quality does count when it comes to longevity (of course, they’re are always outliers to this). That $30 or $40 might look cheap right now but what does it look like 5 years from now?

This is how a savvy saver thinks.

The takeaway

That’s it from me on this one.

Remember, spending less than what you make is a simple strategy to better manage your personal finances. Yes, it’s never as simple or straightforward as that sounds but these tips might just help you get there.

Important

I’m not a financial advisor, this is not financial advice and I’m not qualified or licensed to provide anything like this. This content is a bunch of thoughts from a fellow human for educational purposes only — that is all.