Discount doesn't count
The beauty of buying a handbag, digital camera or sofa on sale for "50% OFF!" is that you feel, deep in your wallet, that you are saving 50% of the price.
But you're not, notes Peter Tufano, professor of consumer finance at Harvard Business School, who has studied this illusion. "You aren't saving money—for a goal or for your future—when you consume more at lower prices."
Luckily, there's an easy fix: Learn to save your savings.
Make it real
If you "save", say, $25 on a new pair of shoes—try to save some or all of that money. (You probably can't save it all, or you would have bought the darn shoes two months ago, at full price.)
Likewise, whenever you commit some courageous act of frugality—by hosting a potluck, mending your kids' jeans—don't pat yourself on the back for being economical.
Translate money—smart moves into tangible rewards, by throwing a few extra bucks into your savings account.
Saving is a series of habits and reflexes. Strengthen that anterior latissimus savingus allofit muscle right now, even if you saved just $5 by bringing lunch to work today. G'wan, save it. Then...
Tell us how you saved your savings today.
Struggling to save? Revisit the Save-to-Spend Budget and consider a revamp.
Save Your SavingsComments
- By MP Dunleavey
- April 28, 2010