For a few months we have been talking a lot about behavioral economics. We have talked about how habits, feelings and errors of thinking cause us to make bad decisions. We have guided you through the behavioral economy and how you can create new economic habits. Now it’s been a while and you’ve probably (yes, you’re not alone) fallen back into old habits. It can be about the usual traps like offers in the mail basket that are just too good not to snap or that consolation jumping that gets you in a little better mood – at least for a little while. Two weeks before the salary rolls into the account again you stand there staring at your balance and wondering how it went? There are many reasons for that
Among other things, we often have poor structure in our expenses, some bills come monthly, others quarterly and sometimes an unexpected invoice rolls in. We sometimes jump spontaneously, eat lunch out once a week and not to mention that daily latte. Every little helps! The problem is that it is often easy to spend money when they are in the account, and the result is that we get a poor track of what we actually spend the money on.
The solution is simple – set a weekly budget
Another problem we have in our minds is our inability to make decisions and long-term thinking. It’s hard to think about “can I really afford this” and especially at the beginning of the month when you often have more money in the account and it is easy to become blind to the daily, usually unnecessary, expenses. But with a so-called weekly budget, you get a better and more short-term plan for your daily expenses.
How to use
When all bills are paid, look at what you have left to move during the month. Move over some into the savings account and divide the rest into four weeks to see what your budget will be week by week. Also, have a better track record by collecting your loans. Then you already know in advance how much you can afford to spend each week. Brain research has shown that this method actually works. It’s an easy way to fool the brain – we don’t have to worry about that long-term thinking and get ahead of us a very concrete, clear and short-term weekly budget that is easy to follow and gets us thinking about a little extra. With the weekly budget you know immediately whether you can afford that jacket or not.