How to Save Money Without Really Trying

6 minute read
Kreisler, a lawyer turned humorist and the Editor-in-Chief of, is co-author with Dan Ariely of Dollars and Sense: How We Misthink Money and How to Spend Smarter.

So, you want to spend smarter. You want to learn how to evaluate your financial decisions more rationally. You want to know what money mistakes you’re making and how to fix them.

But, you want to just read this short article to do so. Interesting. Well, we a) applaud you for saving the cost of our book, but b) suggest that you’re not correctly valuing our effort, and c) offer you the short version of some of what we’ve learned:

When it comes to making financial decisions and assessing value, what should matter is the real pleasure we receive from a purchase, compared to other ways we could spend our money — what’s known as the “opportunity costs.” Not sales prices, “savings,” how we budget our money, the ease of payment, the list price, whether or not we already own something, how fair the price seems to be, the language describing it nor our expectations about a purchase. All that matters is opportunity costs.

There, all is solved! Right?

… Okay, fine. Here are some fuller explanations of how to correct some of our mental money mistakes, all based on years of behavioral science research.

Read More: The Best Money-Saving Apps

Remember: Everything is relative.

When we see a sale price, we shouldn’t consider what the price used to be or how much we’re saving. Rather, we should consider what we’re actually going to spend. Buying a $60 shirt marked down from $100 isn’t “saving $40”; it’s “spending $60.”

We should also try not to think in percentages. The money in our pocket exists in absolutes, not percentages. $100 is $100, whether it’s 10% of a $1,000 sofa or 1% of a $100,000 renovation, it still buys the same 100 lottery tickets. (Also: Don’t buy lottery tickets.)

Don’t trust yourself.

We should also question the prices we set for ourselves. We should avoid doing something all the time, like getting a $4 latte, just because we’ve always done it before. From time to time, let’s stop and question our long-term habits. Those who don’t learn from our spending histories are doomed to repeat them. We should periodically ask if a latte is really worth $5, or if a cable TV internet bundle is worth $140 per month, or if a gym membership is worth fighting for a parking spot just to look at our phone while waiting for a treadmill.

Check this out.

Most people live with a fixed amount of income — salary, benefits, etc. — and a certain level of fixed expenses — housing, transportation, insurance and so forth. The rest is what we call “discretionary,” and this is what we might spend more carelessly.

The simplest and most common way we measure our discretionary money is by how much money we have in our checking account. If we have less in our checking — or we feel that we have less in our checking — it constrains our spending behavior. If we feel we have a higher balance, we spend more.

We can use this to our advantage. For example, we can move a little bit of money out of our checking and into a savings account. Or we could ask our employer to direct-deposit some of our salary into separate accounts. That way, our checking account will be artificially too low, and it will get us to feel like we have less to spend than we really do.

Essentially, we can spend less by hiding money from ourselves. We can take advantage of our mental laziness and the fact that we don’t regularly think about how much money is in our non-checking accounts. In this way, tricking ourselves is an easy and useful strategy. It’s also why my mirror is covered by a poster of George Clooney.

… And tech this out.

We’re at an interesting point in history, where technology can either work against us or for us. Most financial technology works against us right now, because most of it is designed to get us to spend more sooner rather than to spend less later.

For instance, the digital wallet is supposed to be the pinnacle of consumer evolution. Free from cash, we can be flexible, save time and focus less on managing our money while getting data to help us analyze our past spending! Lines will be shorter; shopping will be easier, faster, and frictionless; we’ll be taller and thinner; the icebergs will grow back; and without even getting on my gym’s treadmill, I’ll win a footrace against Usain Bolt! Hooray!

Not so fast. More likely, these modern financial tools will exacerbate our spending behaviors, and we’ll spend too much, too easily, too thoughtlessly, too fast, too often. This future looks bright if we’re a bill collector, credit-card company or a bankruptcy lawyer. But for most of us, that brightness comes from the flames burning a hole in our wallet.

Realistically, we can’t just cover our eyes, move to a basket-weaving community and avoid technology. But we should be skeptical of the latest financial technologies, especially those that are designed to demand less of our time and attention and make it easier for us to part with our money. It won’t be long before blinking in a certain way will be a payment option. Don’t sign up for that.

Know thyself.

While there are many outside forces trying to get our money, the truth is, they aren’t our only, nor our biggest, financial enemies: We are. If we didn’t make poor value judgments in the first place, we wouldn’t be able to be exploited to the degree we are now. We need to understand and accept our flaws and shortcomings. Don’t assume you’re too smart to fall for these kinds of tricks or that they only work on other people.

A wise man knows himself to be a fool, but a foolish man opens his wallet and removes all doubt.

In the end, money really isn’t the only thing that matters. But it does matter, to all of us, a lot. We spend an extraordinary amount of time thinking about it — and often thinking about it incorrectly.

We could continue to let the price-setters, salespeople and commercial interests take advantage of our flawed thinking. Or we could become more aware of our limitations and take control of our financial decisions so that our precious, finite and immeasurably valuable lives can grow richer every day.


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