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4 Tips for Saving Money by Outwitting Your Brain

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The human brain can do lots of things well, but prioritizing your savings account isn’t one of them. Our brains are not wired to delay gratification, so it can be tough for the average person to actually practice the typical tips for saving money.

The trick to being a diligent saver is to find ways that either override your brain’s wiring or to outwit yourself. Here are four psychologically sound things to try:

1. Automatically Transfer $10 Per Week to Savings

You probably know that automation is an excellent way to force yourself to save, but is putting aside such a small amount worth your while? In short, yes. In fact, the low amount is the key to this particular tip. By automatically debiting just $10 from your checking account each week, you’re less likely to notice its absence, making this a painless way to put aside an additional $520 per year.

2. Tape a Picture of Your Savings Goal to Your Credit Card

Our brains can fall victim to a cognitive bias known as hyperbolic discounting, in which we value what is happening now more than what we need in the future. You may be committed to saving for retirement, but that feels less important if those designer shoes are on sale now.

To counteract this effect, tape a picture of something that represents your savings goal directly to your credit and debit cards. This will remind you of your goal every time you pull out your wallet, particularly because you’ll have to remove the picture to spend money. This practice helps keep your savings goal in the forefront of your mind and fight hyperbolic discounting.

3. Save Your $5 Bills

Every time you receive a five-spot, sock it away rather than spending it. Boston Globe staffer Marie C. Franklin followed this unusual tip and ended up saving $12,000 in three years!

This strategy works because it reframes your view of $5 bills. Instead of seeing them as cash to be spent, they become something to be saved.

4. Open an Account for Each Savings Goal

It may seem silly to have different savings accounts for each goal when you could gather all your savings in a single pot. Using targeted savings accounts in this way, however, helps harness the power of mental accounting, which is the brain’s tendency to value assets differently depending on how money is labeled. For instance, you might spend your tax refund immediately after you receive it, but save the money you earn from a raise.

Use mental accounting to your advantage by setting up separate savings accounts. When all your savings are in one place, borrowing from them is no big deal. But taking money out of your European Vacation Fund or your New Motorcycle Fund could hurt much more.

Tell Your Brain Who’s Boss

Most tips for saving money assume that you can grit your teeth and ignore temptations through sheer force of will. The smarter way to save money is to work with your psychological quirks and stop your brain from having the chance to make irrational decisions without you.

Emily Guy Birken is a former educator and respected personal finance writer. She is the author of the best-seller The Five Years Before You Retire, and the forth-coming book Choose Your Retirement. Her work has appeared on Huffington Post, Yahoo Finance, Business Insider, MSN Money, and Kiplinger's, and Birken has been a guest on Wisconsin Public Radio as well as several podcasts, including Stacking Benjamins and The Doughroller.Birken's background in education allows her to make complex financial topics relatable and easily understood by the layperson. Her mix of no-nonsense advice, humor, and research into the latest studies on finance and behavior make her work a go-to resource for anyone hoping to get a better handle on money matter.