141 // Practicing Financial Self Control

Like most of us, you probably flock to the internet for answers when you want to practice some financial self control. In today’s episode, James reveals 12 strategies to curb overspending that actually work, as well as his two personal favorite methods. Throughout the episode, you will learn:

  • 12 scientifically proven underspending strategies
  • Whether or not the method is more important than the habit itself
  • And if those internet articles are helpful or just hurtful

Practicing Self-Control

We’ve discussed in previous episodes how our brains are wired to seek short-term gratification over long-term goals with no immediate pleasure. Therefore, we have to exercise self-control to resist the short-term temptations that come up in our everyday lives. So how do we do that? Is there one strategy that works better than the rest? In a new study published in the journal PLOS ONE, they looked at financial self-control strategies in academic literature to find out which ones are effective.

Top 12 Proven Underspending Strategies

  1. Using a retirement savings projection plan
  2. Planning purchases with a shopping list
  3. Considering why you are pursuing the goal
  4. Paying with cash as opposed to cards
  5. Tracking weekly saving deposits
  6. Using a savings account with no early withdrawals
  7. Keeping budgets for shopping trips
  8. Anticipating future regret over purchases
  9. Setting specific saving goals
  10. Keeping cash in bills in general
  11. Keeping cash specifically in large denomination bills
  12. Making money hard to access

The scientists further analyzed this data to decide whether proactive financial self-control strategies (strategies focused on what people can do to control spending before they encounter a tempting situation) or reactive financial self-control strategies (strategies focused on what people can do during a tempting situation) were more effective.

As it turns out, it doesn’t really matter how you practice financial self-control, as long as you are consistent with your chosen strategy.

One Step Forward, Three Steps Back

Holistic financial planning is about knowing that our money decisions and the triggers for when we buy always have a why. In a second analysis, they analyzed which financial self-control strategies were promoted online. The overlap between this study and the first one based on academic studies only overlapped 55%. That means that half of the underspending habits promoted online aren’t effective; they’re just marketing ploys that lead you astray when you’re trying to remedy a harmful spending pattern. James notes how making a budget was listed in this article as one of the best underspending strategies, but he would disagree. Budgets are like diets for spending-they create confusing and rigid boundaries that are impossible to maintain, creating a cycle of taking one step forward only to take three steps back. And when they tell you that buying things on sale will help you stop overspending? That’s just a marketing tactic that tricks you into buying stuff you probably didn’t even want until you saw it was on sale.

Holistic Financial Planning to Curb Overspending

It’s important to remember that one is none, two is one. Your first line of defense for overspending, your proactive strategy, might fail from time to time. If you double-arm yourself with a reactive strategy as a backup, you’ll be less likely to fall for the voice in your head that says you need whatever is on sale inside the Target. Underneath all of this, if you want to pick strategies that will work best for your unique overspending habits, it’s valuable to know what motivates your money decisions. Holistic financial planning adds a layer of awareness to this dance so you can experience buyers remorse less and feel confident in your purchase decisions.

Subscribe to our blog, podcast and video library.

We promise to never share your information.

Share this post with your friends

Invest In Your Life. We’ll Do The Rest.

Discover a new approach to wealth management where your investments, tax preparation, and estate planning services are offered by one team of fiduciary experts, all under one roof, for one simple fee. Wealthquest is a fee-only financial planning and wealth management firm focused on the integration of your life and finances. Regardless of your account size or stage of life, our firm can help.

Cincinnati

50 E-Business Way
Suite 120
Cincinnati, OH 45241

T: 513.530.9700
F: 513.530.9776
info@wqcorp.com

Mon – Thur 8AM – 5PM
Friday 8AM – 12PM
Sat – Sun Closed

MAP

Chicago

2211 York Rd
Suite 210
Oak Brook, IL 60523

T: 630.581.3580
F: 513.530.9776
info@wqcorp.com

Mon – Thur 8AM – 5PM
Friday 8AM – 12PM
Sat – Sun Closed

MAP

Naples

4850 Tamiami Trail North
Suite 301
Naples, Florida 34103

T: 513.530.9700
F: 513.530.9776
info@wqcorp.com

Mon – Thur 8AM – 5PM
Friday 8AM – 12PM
Sat – Sun Closed

MAP

Scroll to Top

Event is not valid!