On the couch
Humans are an interesting bunch. Look at how we have evolved from (some would argue) hairy apes to purse-clutching citizens who choose to spend money on brand-name bottled water – even though H2O falls freely from the sky. We also choose to pass our time binging on television shows that imitate our medieval past, but that’s another story.
Exploring why we do what we do is the stuff of behavioural psychologists. They ask the important questions like, ‘What drives us to spend our hard-earned money on wine and chocolate even though we are trying to save up to buy a house?’. Or, ‘Why is it so important for us to wear designer-label fashions, even though our pay packet doesn’t really allow it?’.
When it comes to the psychology of saving, it’s the field of behavioural economics that we’re particularly interested in. Indeed, the whole world is right now, with American academic and noted behavioural economist Richard Thaler recently being awarded the 2017 Nobel Economics Prize. Thaler’s work is based on the premise that we humans are, well, human – that is, prone to irrational decision-making that gets in the way of shrewd saving.
Thaler’s astute observations may sound a little grim if you’re hell-bent on saving some cash. So what can you do about it?