When January’s credit card bill thuds onto your doormat, “save money” quickly gets promoted to the top of your New Year resolutions list. So how come a fortnight later you’re eyeing up Caribbean resorts every time it rains?
A new study published in the journal Psychological Science could stop you frittering away your hard-earned cash before you've earned it. Researchers found that our standard way of visualising time – as a line leading from now into the future – makes us overly optimistic. That's why that little extra disappears from our account each month, as we convince ourselves we'll save double next time.
The study tested this "linear" mindset against what study author Leona Tam, from the University of Woollongong in Australia, calls a "cyclical" approach. This means recognising that we make the same imprudent mistakes every month and need to create concrete plans to fix them. Instead of aiming to save a certain amount over a year (and coming up short), set up a direct debit to bank 10% of your paycheque as soon as it lands. That way you won't book a holiday now, in the misguided hope you'll tighten your belt later.
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