3 Psychological Tricks That Can Really Change How You Spend Money

Joanne Poh



It might sound harsh, but in Singapore the only way to get people to do things they don’t particularly want to do is to scare them. The only thing stopping many people from littering is the fear of being fined by a plain clothes policeman. School kids put themselves through punishing hours of study not because they like learning but because they’re afraid they’ll end up as roadsweepers when they grow up.

Since 4 in 10 Singaporeans aren’t saving for retirement, of which 31% have never even thought about it, it looks like scaring people into submission is in order. If you have the vague desire to save money but just don’t have the discipline to do so, here are four psychological tricks you can play on yourself.


Think about how many hours you have to work to pay for an item you’re buying

As much as Singaporeans love shopping, they also hate their jobs. 75% slave away at their jobs just to put food on the table, according to a 2014 survey. This loathing of work is the perfect ammunition for curing a shopping addiction. Each time you want to buy something unnecessary, just ask yourself how many hours you’ll have to work to pay for it.

For instance, if you earn $3,500 a month and work about 40 hours a week, that means you make a little less than $22 an hour. A $30 meal at a mid-range restaurant is actually costing you 1.5 hours of work. To buy a $100 pair of shoes, you have to work more than 4.5 hours. That $500 TV set is 23 hours of work—more than half a week! If you spend $500 paying instalments on your car each month, that’s 22 hours of labour right there. And if you’ve got a $3,000 Prada bag, know that you laboured 136 hours to get it—that’s more than 3 weeks of work!


Subtract from your net worth

You’re probably not going to appearing on Forbes’ list of wealthiest people anytime soon, but still, it’s nice to know what your net worth is—so you can freak yourself out when a big ticket purchase subtracts from it.

Your net worth is basically all your assets—money in your bank accounts, the value of your investments, minus your debts—student loans, credit card debt and so on.

Each time you’re about to make a major purchase, such as a car, new furniture or a designer handbag, subtract the value from your net worth. You might have been worth $100,000 before, but thanks to that $50,000 car you’ve buying, your net worth now falls to $50,000—ouch!


Calculate how much the money you’re about to spend would be worth if you invested it for 20 years

The great thing about investing is that a small sum of money can grow much bigger given time. And the bad thing about spending a lot of money today is that that money could have grown a lot more if you had invested it instead.

The next time you’re contemplating whether or not buy something, think of the cost of that item not just in terms of its dollar value today, but in terms of how much that money will be worth in 20 year’s time if you invest it.

That $100 will be $263.55 in 20 years if you invest it at a return of 5% per annum thanks to compounding interest. Buying the new iPhone for $700 actually means you’re forgoing $1,857.31 in 20 years’ time. And if you think you can’t live without that $3,000 wedding photoshoot, know that it could cost you $7,959.89 in the long run.

How do you stop yourself from overspending? Tell us in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.