Money management is one of the most important skills that people can learn. After all, sound money management is what ensures that people can buy what they need as well as some of what they need without having to put themselves into debt in the process. However, money management can be much more complicated than it seems on initial consideration, not least because there is a psychological component to it.
How Can You Manage Your Money Well?
Simply put, people cannot manage their money unless they know how to manage their money. Fortunately, there is a great deal of information about this topic that can be found out there, meaning that interested individuals should have no problems informing themselves so long as they are willing to put in the time and effort. However, it is important to remember that sound money management is reliant on not just the knowledge needed to make the right choices but also the motivation needed to follow through with the right choices. Something that can be rather challenging when so much of sound money management is about avoiding immediate gratification in anticipation of a better outcome in the long run. With that said, even if someone is struggling with this particular part of money management, there are methods that they can use to improve.
How Can Your Past Help You Manage Your Money Well?
One example is connected to the power of emotion. In a study conducted at Creighton University, scientists split the study participants into two groups. One group was asked to attend a presentation on sound money management, which had a particular focus on saving money. Meanwhile the other group was asked to bring something with them that they considered to be nostalgic before being led through a series of exercises meant to create a connection between those things and their savings goals. Afterward, both groups were monitored to see the impact of these two sessions on their personal spending patterns, which produced some rather interesting results to say the least.
The group that attended the presentation on sound money management started saving more. In fact, they started saving 22 percent more compared to their previous selves, which is a significant upswing by any standard of measurement. However, this was not particularly surprising because people spending more after seeing something that doesn’t just encourage them to save more but also provides them with information that can be used to save more is the expected outcome under normal circumstances.
Instead, what was more interesting is that the second group started saving 67 percent more compared to their previous selves, which is much higher than the change seen in their counterparts. As a result, it is not unreasonable to say that nostalgia can have a powerful effect on how people choose to spend their money, which in turn, means that it could be a powerful tool for those seeking to master money management. Something that should come as welcome news to those have the knowledge needed to manage their money but not necessarily the motivation needed to put that knowledge to sound use.
Fortunately, the process used to harness the power of nostalgia for the purpose of saving money is a simple and straightforward one. What happened was that the study participants were encouraged to think about why they considered their chosen things to be nostalgic for them. After which, they were encouraged to think the values that caused them to feel nostalgic, before being encouraged to make an attempt to connect those values to their savings goals. For an example of how this might work in practice, someone might have saved a decoration from a family celebration, which reminds them of the importance of spending time with family members. If said individual is saving up for a vacation in the future, it should not be difficult for them to connect those fond feelings with a saving goal that would enable them to spend more time with their family members.
Ultimately, this process is all about providing a person’s resolution to save with not just rational decision-making but also the power of emotion. Of course, different people can respond to such methods in different ways, which is why interested individuals should not just rely on this particular suggestion but also check out some of the other ways that they can bring their rationality and their emotions into perfect alignment on the topic of saving money for sound money management purposes.