The psychological hack that can help you save more money

The psychological hack that can help you save more money The psychological hack that can help you save more money “Bank of Dad” is a weekly column which seeks to answer questions about how to  manage money  when you have a family. Want to ask about  college savings accounts,  mortgage hacks, or how to be a little bit  better with money?  Submit a question to Bankofdad@fatherly.com. Want advice on what stocks are safe bets? Ask your broker. And then tell us. We’d love to know.  â€œI suck at  saving money. I don’t buy luxurious stuff or make decisions that put my family in jeopardy, but I am bad at, say, not buying coffee out every morning or packing my lunch. I put some money away but should put more away. We’re about to have a kid, so I want to get better. Our finances aren’t bad but they need to improve. My buddy mentioned financial psychology to me. What is it and is there any worth in looking into it? ” - Chris L., Kissimmee, FLIt’s one thing to identify areas that you need to work on in your  financial life.  But actually changing bad habits that may have been there for year s? That’s something altogether different. The latter is where financial psychology comes into play. The idea is to help individuals not only create worthwhile goals for managing  money, but overcome the mental obstacles that tend to trip them up along the way. It’s not all that different from someone trying to lose weight. How many people do you know who have found it hard to shed pounds over an extended period of time? It’s not that they don’t know  what  to do. In fact, that might be the easiest part. It’s that, for whatever reason, they simply can’t achieve the desired result.Some are trying to apply that same thinking to the world of  personal finance.  The idea has certainly been catching on in recent years. Today, there are a handful of organizations that train advisors on how to recognize the attitudes and behaviors that prevent clients from reaching their goals. Does that mean you’ll be asked to lay on the couch and talk about your relationship with your mother the next time you visit a financial planner?Not quite, says Dr. Bradley Klontz, who co-founded the  Financial Psychology Institute  in 2002. “We’re not training financial advisors to be therapists by any stretch of the imagination,” says Klontz. “What we are doing is equipping them with the theory to understand their clients’ behaviors.”How might this work in real life? Klontz offered me the example of an advisor who’s trying to get their client to create a will but is hitting resistance. In that case, the planner might try to steer the conversation in a way that gets at the root issue behind their caginess.Of course, you can use the basic precepts behind financial psychology without necessarily working one-on-one with an advisor who’s certified through FPI or another like-minded organization (Kansas State University’s financial therapy program and the Kinder Institute of Life Planning, for example, meld these two disciplines as well).Here’s a strategy that applies to your particular pitfall. When it comes to building up your  savings, Klontz is a proponent of making your goal as tangible â€" and as personal â€" as possible. So if you’re creating an  emergency savings account  for your new family, he suggests actually naming it after your child.Perhaps it becomes “Jamie’s Security Fund” or the like â€" something that emotionally links each transaction with your son or daughter’s welfare. Suddenly pulling money out of the account to eat out or sip venti macchiatos five days a week becomes a whole lot harder. If you really want to eliminate temptations,  automating your contributions  doesn’t hurt either.Klontz points to a 2017 double-blind study that he spearheaded as evidence that these emotional attachments really work. One randomly assigned group of participants was given a fairly standard lecture about building up their savings. The other group was told to bring in a nostalgic item and was prompted to talk about how their savings goals related to that item. In other words, they explored the reasons  why  they were putting money away.After three weeks, both groups managed to increase their savings level. But the uptick was three times greater for those who took the emotion-based appro ach.“When you develop excitement about what you want, it’s really easy to pass on these things that have no meaning to you,” says Klontz. “But you really need to engage that emotional part of your brain.”I can tell you from experience that saving and  investing  doesn’t get an easier once there’s a new mouth to feed. If ever there was a time to address your financial stumbling blocks, this is it. Congratulations on your exciting news.This article was originally published on Fatherly.