At this time of year many people are making their New Year resolutions about how they’re going to do thing differently in the coming year. Often their choices are shaped by their festive excesses; losing weight or getting their finances under control.

Last week, I was interviewed by a couple of radio stations who wanted a consumer behaviour expert’s take on this topic (I even had the good fortune to share one broadcast with the financial expert, Alvin Hall).

What many people don’t realise is that cutting back on spending can be every bit as difficult as cutting back on food: a money diet is just as hard for many of the same reasons.

The way we spend is, very often, shaped by our unconscious mind and influences on it.

For example, spending can fulfil all sorts of psychological needs, depending on the person; it’s easy to resolve not to spend more when these needs aren’t being strongly felt (perhaps the pain of a credit card statement is masking them in the way a hangover masks the pleasure of drinking excessively). But after a bad day, you might well find yourself walking towards your favourite store and buying something to cheer yourself up.

The retail environment (be it on-line or in stores) is designed to make us want things. Again, sitting at home, it’s relatively easy to say you won’t spend as much. But when you join your friend on a shopping trip your good intentions are going to come under enormous pressure. With the right display and a good salesperson, we can find ourselves deciding that we really “need” something we didn’t even know existed before we left for the shops.

So whilst it’s relatively easy to tell our conscious selves that we’ll do something less, the unconscious mind takes much more convincing. In fact, I believe that for most people to be successful at saving money, it’s the unconscious you have to get to.

One way of counter-balancing the drives that make us want to spend has recently been identified by researchers in the US.

In one study people were split into two groups; one set read an article that suggested that they would always be like they were now, their self-identity wouldn’t change. The other group was told that graduating would lead to them changing as people.

In a second study people were asked how connected they felt to their future selves.

In both cases people were given a choice of rewards; either a lower value gift certificate available sooner, or a more valuable one they would have to wait longer for.

What the studies found was that when people felt more in-tune with how they would be in the future they were more willing to trade-off quicker gratification for the longer term pay-off. Whereas when they believed they couldn’t relate to how they might feel in the future they were more inclined to go for something sooner.

So if you want to save money, focusing on the constants in your life rather than the things that are changing, and working on the basis that you will have the same values down the line, is likely to help you sacrifice a little gratification from buying now for the longer term benefit of having that money available later.

Source: Daniel M. Bartels, Oleg Urminsky. On Intertemporal Selfishness: How the Perceived Instability of Identity Underlies Impatient Consumption. Journal of Consumer Research, August 2011

Image courtesy: Mike Bitzenhofer