Using a calculator to budget

Want to Stick to Your Budget? Science Says This Will Double Your Success Rate

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Tobi Abdulgafar
July 6, 2018

Ever heard of a famous experiment using marshmallows to test kids’ willpower?

What happens is, a child is left alone in a room with one marshmallow for an undefined period of time —emphasis here is on undefined— with a simple instruction:

Resist eating the marshmallow until I return. If you do, I’ll reward you with a second marshmallow at the end of the experiment. If you eat the marshmallow before I return, you don’t get any additional marshmallow.

Well, what does a marshmallow experiment have in common with sticking to a budget?

It’s simple.

They both require you to resist temptations and that, unfortunately, is one of the most tiring things for the prefrontal cortex —the part of your brain that controls willpower.

Creating a budget and sticking to it is hard and tiring. It’s no wonder, two-thirds of Americans don’t even bother creating one it’s too much torture.

Here are 4 things Science says you should do to successfully stick to your budget:

Freeze that credit card

“Are you struggling to keep your credit card use at bay?” Asks Jon Rampton, Founder of Due, an online payment company.

“You don't want to get rid of your credit card completely —since you’ll need it at some point. Try freezing your credit card. And, I mean that literally. Place it in a bag of water and put it in the freezer. This way you'll have to thaw your card before using it.”

Hopefully, this will cause you to think twice before making a spontaneous purchase that deviates from your budget.

“But does Science agree with Rampton?” You might wonder to yourself.

Of course it does, a study from MIT found that subjects were willing to spend 64% more on a pair of basketball tickets when using a credit card over cash.

Let’s break down this study:

So if the tickets cost were say, $101 and only cash payments were accepted, the “average joe” would walk away saying it’s too expensive. But surprisingly if the tables were turned and only card payments were accepted that same individual wouldn’t mind paying $164.  

Cards make the purchase look less tangible, making you willing to spend more without even noticing it.

Get used to comparison shopping

Say, you’ve been paying $1.07 for a can of V8 at your local grocery store; then you get to know that your buddy Max had been getting his for 50¢ at a different store, or that the shower mat you just bought goes for half the price at T.J. Maxx.

How would you feel? Not very proud right? I can totally relate. Your budget too would feel deserted.

All these wouldn't have happened if you had compared prices beforehand.

Comparison shopping for a lot of household bills can be pretty difficult and time-consuming.

The prospects of spending an inordinate amount of time, patience, and effort calling up to 20 numbers to compare prices of your household bills, isn't one a lot of people look up to.

Thus, to help more people get the best value for their money, free services like Squeeze takes the tedium out of the process while also offering consumers opportunities to save up to hundreds of dollars each month by providing a platform that easily compares rates and prices for different industries.

five girls sitting together with a tablet, computer and credit cards

Use envelopes

Using an envelope is pretty straightforward:

Simply split your spending into groups; examples of common groups include groceries, clothing, household items, utilities, rent, entertainment or dining out, gifts, and Miscellaneous.

Get an envelope for each group and write the group name on the envelope. Then, after each paycheck, put in the budgeted amount of cash into each.

Once you run out of cash in an envelope, you have met your budget for that pay period and must no longer spend any more in that group until you receive your next paycheck.

The  good thing about using an envelope is:

It removes the need to make a decision: say, you spot a shoe for $80 and you take liking for it. The next step (which thankfully is automatic) is to check the clothing envelope; if you find say $50 in it, you know right away that the shoe will have to wait till the next payday.

And remember, automatic decisions such as this de-stresses our prefrontal cortex allowing it to focus on other more important things such as the big picture of why you're actually budgeting.

Visualize your future self

Ever heard the saying seeing is believing? In the scientific sense, seeing is actually achieving. Because as it turns out, envisioning your desired outcome in your mind’s eye helps to increase the likelihood of achieving it.

A New York University study found that people who visualized their future self-were able to stick better to budgets and save more for retirement.

Desired outcomes vary from person to person, some people need to picture themselves leading a pretty comfortable life post-retirement. Others might picture themselves taking their family on an interesting vacation.

Whatever your goal for budgeting is, take some time out to picture yourself achieving that goal it provides subtle encouragement for your brain to stick to the budget.

Final thoughts

A key to sticking to one's budget is to put as little stress as possible on the prefrontal cortex— Automate Automate and Automate.

Here’s an interesting video re-enactment of the Marshmallow experiment.