Secrets to saving money

Manipulate your brain into saving instead of spending money by following these rules of thumb.

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While we all like to think we know what's going on in our heads, it is unfortunately the case that our brains are often a step ahead of us. We put together budgets, make shopping lists, and track our expenses, and yet the savings account doesn't seem to grow.

What gives? The secret is that there isn't anything wrong with you. The problem is your brain: Your grey matter is very good at convincing you to do things you don't really want to do. Luckily, you can manipulate your brain into saving rather than spending. Just use these three tricks.

Never Shop Hungry

We all know the sage advice of not going to the grocery store while hungry, and you may have even experienced that confused feeling of unloading shopping bags filled with junk food instead of your usual groceries. But did you know that shopping hungry affects all kinds of purchases? A University of Minnesota study1 found that hungry shoppers spent 64% more at a department store than their well-fed counterparts.

The researchers explained that hunger puts shoppers in an acquisition mode&mdashwhen you're hungry, it becomes imperative to find and consume food. Unfortunately, those feelings can easily spill over into other types of shopping, making you spend more than you really want to (or should).

So, do yourself a favor and always eat before you shop—no matter what kind of shopping you do.

Never Shop in a Bad Mood

Less widely known, but just as important, is the link between your general mood and spending money. Just like hunger can put you in a state of mind to find and consume, so can a bad mood—only instead of satisfying your hunger, you're attempting to make yourself happier.

A Psychology & Marketing study2 found that mall shoppers who were in a bad mood were more likely to make impulse purchases of treats for themselves. While these purchases weren't uniformly "bad" for the shoppers —82% didn't regret the purchase—they did lead to more spending than was planned. A separate Harvard study3 found that people who had seen a sad movie were willing to spend 300% more on a water bottle than people who watched a neutral movie.

In other words, shopping to improve your mood is a real thing, and apparently, it's a pretty good method. However, it's not going to help you if you're trying to save money.

So, try to find another way to improve your state. Maybe some exercise, a relaxing hobby, or a good book could help? Wait to shop until your mood improves, and you'll have an easier time sticking to your budget.

Never Shop After You've Saved Money

Did you manage to come in $100 under your weekly budget, or find that TV you wanted on clearance somewhere? Great! Stop shopping right now.

Counterintuitive as it might seem, shopping after you've experienced a savings is generally a bad idea. The reason comes down to what behavioral finance researchers call "mental accounting." Essentially, we tend to keep different accounts in our minds, even if all of our money is sitting in the same place.

So, if you've just "saved" $100 on a new TV, your brain is likely to treat that as extra freebie money—even if you were searching for a good deal precisely because you didn't have that money to spend. It's the same reason we tend to spend our tax returns: The money isn't technically free, but it feels free.

To cut your brain's gymnastics off before they harm you, move your savings over to a savings account right away. If you'd budgeted a certain amount and "saved" on it, clear the account the rest of the way so that you're not tempted to treat that money like a freebie.

Your brain can be quite convincing about spending when it's hungry, angry, or pleased with itself, but luckily, there are ways to rein it in. Implement these tricks, and you'll find that saving money can be a lot easier.

Topics:
  • Saving and Spending
  • Saving and Spending
  • Saving and Spending
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1. An Empty Stomach Can Lead to an Empty Wallet, University of Minnesota study, 2/17/15
2. Psychology & Marketing Volume 28, Issue 6, pages 638–659, June 2011
3. Cryder, C.E., Lerner, J.S., Gross, J.J., & Dhal, R.E. (2008). Misery is not miserly. Psychological Science, 19(6), 525-530.
This article was written by Anna B. Wroblewska from The Motley Fool and was licensed as an article reprint. Article copyright March 5, 2015 by The Motley Fool.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third party provider of the reprint permission and Fidelity Investments are independent entities and not legally affiliated.
The images, graphs, tools, and videos are for illustrative purposes only.
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