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Be Your Own Financial Planner: Part 8 – The Colour (and Psychology) of Money

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By Ed

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Over the last 6 months and continuing through the next year, Canada is getting new, high tech bank notes.  While this probably isn’t news to anyone here, it may be exciting to anyone visiting Canada this summer and it affords me an awkward segue to a couple topics.

The first one is counterfeiting and how to check our bills.  

The Bank of Canada has great videos and tools for checking our money – old and new – and you can digest them in less than five minutes each.  Check out the one on our new polymer banknote to see what is a real security feature (super secret spy numbers in the maple leaf window) and what isn’t (maple syrup smell that many are alleging).

The second (and real) reason for this post is money psychology and how you can get it to work in your favour if you spend too freely.  Not as fun as scratch-and-sniff money, but more real and, I hope, more practical.

Spending money is a requirement of modern life.  We’ve talked savings and the basics of goal-setting and budgeting, but no matter what we do, most of what we make will go back out into the world to pay bills, buy necessities and to treat ourselves once and awhile.

If you are someone who finds the flow out seems to be greater than the flow in, here are a couple quick ideas and one slow one to try and slow it down:

Carry Cash 


Leave the cards at home.  While credit and debit cards offer great benefits like monthly statements and Points collections with various plans, there is anecdotal and research evidence that carrying them will make you spend more

If you can give yourself a Cash Budget (like our weekly Pocket Money” strategy or when grocery shopping) you will spend less – even with how common bank machines are in our world.  There is something about holding the cash and handing it over for a purchase that makes us think twice.  Plastic does not have that stigma. 


Carry big bills


This interesting effect may make you feel like a mobster, but again, there is evidence that it will help you. We (and the effect spans across countries and cultures) are reluctant to break a bill once we have it and when we finally break down and spend it, we make better purchases. 

The flip side of this is that once a bill is broken, it will probably get spent faster, so if you have trouble not spending, hold onto that big bill as long as you can and it can teach you willpower.  The effect can be seen with as little as $1 in coins versus a one dollar bill.  

Soul Search

This is not a quick, painless fix.  Many financial experts have harped on this – and for good reason.  If you are spending money recklessly, you probably have a reason you are doing it.  It won’t be pleasant, but it will require addressing before you can get your spending under control. 

For me, it was the idea that I finally had money of my own and didn’t have to screen my impulses through my parents or anyone else.  I ran out of steam on this pretty quick, as their anti-credit card lectures screamed louder than my spending impulses, but I still bought some stupid crap along the way.

Calling B.S. on yourself is a life skill that can serve your personal finances too.

As with anything important, there is no quick-fix, silver-bullet, panacea (redundant much?).  You chip away and you chip away and you make a healthier (financial) life for yourself.  We still splurge, but we do it less often and we are aware of the splurging when we do.  We are now more intentional with our spending; we have a Vision Statement for our family’s resources.

The doctor is out (disclaimer –I’m no more a doctor than Lucy was on Charlie Brown).

Do you have any tricks to control your spending?  Do share, I’m always looking for more.

Keep reading…

The “Be Your Own Investment Manager” Series:

Part 1: Best Time to Start
Part 2: How Much and How Often to Invest
Part 3: Invest in Your Debt?
Part 4: Risk and Return
Part 5: Mutual Funds
Part 6: Simple Investment Options
Part 7: Saving for Retirement (RRSPs)
Part 8: The Colour and Psychology of Money
Part 9: Saving for Education

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Sunday 11th of November 2018

One of the best ways I control my spending impulses is to remind myself that I could make much of what I’d like to buy. This is more for us home decor junkies, and of course it requires an enthusiasm for DIY, but honestly, even wondering “could I make that, or something similar that would serve the same purpose?” gets my thoughts realigned with my goals: taking less, giving more. Which I interpret for me, as spending less and using my resources and my talents more. That goal keeps me in the right state of mind so that resisting those special treat purchases doesn’t build up into feeling deprived, or even worse, that dangerous feeling of scarcity, where you feel you must get things when you can or else you may not get another chance. The goal of making excellent use of my resources gives me an excited, challenged feeling that replaces the temptation of whatever is in front of me. Once I put my mind back in that place of appreciation of my resources, I suddenly can see all the “stuff” out there in the stores as excessive and wasteful.


Saturday 19th of May 2012

Actually Andy, garage sale-ing (SP?) is a textbook example of cash budgeting, so your comment is bang on. You need to hunt and look for bargains and then stretch what cash you brought out to the next sale. My problem with garage sales is that they all occur too early in the day for me to get the real deals from - for example, it is now 10AM and I am still in my pajamas.

And thanks for the comment. We have more readers than writers, which is cool, but we always appreciate new takes on topics.


Saturday 19th of May 2012

Hi Ed, it's Andy and i wanted to post something about how much I like to shop garage sales but that technically is not a trick to control spending, its actually an example of spending more money. So I wasn't going to post anything, but then felt bad because nobody else has commented yet. Soooo... yeah um garage sales are neat.