Does your money disappear soon after payday? Do you find it difficult to save cash? Take heart. Now it is possible for you to change the way you manage your money and put more cash in savings based on how you answer three easy questions.
Sounds a little too good to be true, doesn’t it? That, however, is what researchers at the University of Georgia found when they conducted a survey of 230 people recently.
They say the questions are designed to find out how you think about your money, which leads to how you spend it, which then helps you to save more money.
Ready to try out the questions for yourself? We will follow the questions with answers based on the research findings. Hopefully then you will be on your way to spending less and saving more of your hard-earned cash.
The questions
Say how much you agree with these three statements:
1. I can predict situations when I will spend more money than I mean to do.
2. I know what I should do in a different way to better manage my money.
3. I know what motivates me to save or to spend money in the way I do.
The answers
The key to your answers go something like this:
1. If you can predict when you will spend more money than you should, the answer is to figure out ways to avoid getting into those spending situations in the first place. If you know what the triggers are you can find ways around them.
When you are stressed, for example, you might realize you are going to spend more money because that helps you cope, says Kristy Archuleta, a professor in the College of Family and Consumer Sciences at the University of Georgia who is lead author of the study. So perhaps you should get up and go for a walk instead of looking through Amazon products on your computer to see what you can buy, she adds.
2. If you know what you should do differently when it comes to managing your money, go ahead and do it, perhaps one step at a time.
Ask yourself what is one thing that you can do differently today to help you to manage your money more effectively, suggests Archuleta, who works with financial planners and coaches to help them assist clients. Perhaps it is packing your lunch before you leave for work so you will avoid spending money eating out, she suggests.
All of us can think of those things we know we should do, but we do not do, explains Archuleta. She gives these examples: I know I should be eating more vegetables and fruits. I know I should work out daily. Do we do these things, however? For her, Archuleta says, the answer is that it depends on the day. The same, she adds, is true with our money.
3. If you know what motivates you to save or to spend money, avoid the spending and practice the saving. If you can figure out what drives you to save or to spend money, you can provide yourself with the motivation to make permanent changes to your budget, Archuleta says.
Personal money habits
In the survey the researchers asked the volunteers to report on their personal habits when it comes to money. Among the questions were whether they pay off their credit cards in full or how often they save cash for retirement. Then, they tested each respondent on their knowledge of inflation and stocks. Finally, the team questioned the group on their anxiety levels when it came to the state of their finances.
Putting it all together, the researchers found a connection between how people think about the actions they take using their money and about their financial situations. They found that improving people’s knowledge on finances, finding ways in which people can be motivated to alter their spending habits, and methods to decrease their financial anxiety all helped those who took part in the survey to show healthier money habits.
If you know what financial issues trigger you to spend more money, you can figure out the best ways to avoid those situations and hold on to more of your money, the team found.
The three-question evaluation is a good beginning point for people to evaluate what they do with their money and why they do it. It also is an entry point for financial counselors to go deeper into the reasons people save or fail to save money the way they should, Archuleta concludes.
The study is published in the Journal of Financial Counseling and Planning.
