In today’s world, we depend so much on the dollar to survive. From swiping our credit cards at the grocery store to feeding our spare quarters to the parking meter, money makes the world go around. But money can be complicated – it can create competition, establish status, and cause stress. When it comes to dealing with prices and money management, our brains trick us into making a decision that may be worth a lot more than it really is.
On Brain Games, we learn why you get overexcited when you think you’re getting a good deal and why we judge the worth of something by putting a price on it. But what really makes the difference? If money is money then the things we’re spending on are just things. How can one pie be worth ten dollars and another thirty?
Turns out the difference is determined by our brain’s natural tendencies. Studies have shown that just the idea of something being more expensive triggers areas of your brain associated with rewards, causing you to enjoy it more. We’ll pay more for something just because we think it’s the best option out there and at the end of the day, spend more than should.
Here are five ways to keep your brain from burning a hole in your wallet:
- Set Financial Goals. By giving yourself a monthly budget, you’ll be more aware of how you’re shopping and be less likely to overspend.
- Question the Quality. Let’s say you’re in the market for a new basic t-shirt. You’ve found one for $50 dollars and another for only $20. The more expensive one seems to be the better option. Why else would it be that much more money? It must have a better fabric or fit. Before you’re charmed by the price tag, really think about how it’s different from the $20 dollar shirt.
- Self-Quiz. So you’ve decided which item to choose from. Before you head to the check-out stand, evaluate its pros and cons. Do you need it? How does it fit in with your financial goals?
- Do the Math. More often than not we think we’re getting a better deal than we really are. Do you have to spend more to save more? Why not just save more in the first place by spending less.
- Get In, Get Out. Figuring out what you need from the store ahead of time will help you stay on track while shopping. By making a shopping list, you’ll be less likely to browse aimlessly down the aisles and pick up unnecessary things.