1. Digital money makes us decadent

You can buy anything almost anywhere.
Thanks to modern technology, we don’t even need our wallets anymore.

We can pay on the internet with PayPal, in stores with Apple Pay, Google Pay, or simply with our credit card. We don’t really need cash anymore — paying digitally is usually much more comfortable.

But without us realizing it, it costs us more. The convenience of digital payments is that we don’t have to touch our money — which is the downside. We lose the sense of money and how much we have.

Anyone who has ever paid with cash knows the feeling. We want to buy something, but first, we have to take a painful look at our wallets.
Only after a check whether there is enough money can we continue.
Thanks to digital payments, we don’t have to worry about our wallets.

We simply pay through our bank account, where there is usually enough on it. Checking the account balance before paying is rather unusual. Therefore, we only see the price.

The effect is dramatic — we spend more money. That’s exactly what a Dun & Bradstreet survey¹ shows, too. We spend 12–18% more with credit cards.

2. Use loss aversion to your advantage

Paying with cash is a good step toward spending less money.
Thanks to it, we can realize what money really means.

You may have noticed that losing is more painful than winning.
We feel stronger emotions when we lose $50 than when we gain $50.
This effect is called loss aversion. Most of the time, it favors irrational decisions. But we can also use it to our advantage.

If we want to save money, it makes sense to link spending with emotional pain. The trick is simple: To make loss aversion work for us, we just need to identify what we could lose.

Count your cash. Realize how much there is — after that, you’ll have a much harder time spending it.

3. Change your bank account

Many people still use the account that their parents set up for them in the past. The problem is that these accounts often no longer have good conditions.

Of course, there is no such thing as a perfect bank account. Every account has advantages and disadvantages.

But from today’s perspective, the conditions for older contracts are often no longer good — it makes sense to change, perhaps even within the same bank.

It’s time to rethink your choice of account. Apart from the costs that an account has, other factors are interesting for spending less money.
You should also consider the following possible features of your bank account:

• Payback
• Interest on your bank balance
• Transaction costs & withdrawal fees
• Special offers and cooperations
• Insurances
• Loans

Alternatively, you don’t have to cancel your existing account.
There are many good reasons to have more than one account.

Many accounts have special benefits for a target group. Some offers are attractive for entrepreneurs, young people, couples, and frequent travelers. By using several accounts at the same time, you can benefit from several advantages.

For example, you could benefit from a payback system on your consumption account. On your savings account, you could benefit from a better interest rate.

Using accounts for different purposes can also help you achieve financial goals. You could transfer an available amount for consumption from your main account to yourself each month — this way, you can make sure you don’t spend more than you plan.

4. Spend less to invest

Why spend less money at all?

That’s a legitimate question that many people ask themselves. Money in the account loses value — and sooner or later, we end up spending it on something that seems tempting.

The problem with money saved is that it is easily available. The more we have saved, the more reckless we are about spending it again.
It’s like the yo-yo effect.

A good idea is to invest the money we save.
That way, we won’t be tempted to spend it at some point.
In addition, investing can be very motivating to spend less.

For example, if you invest your money in ETFs or P2P loans, they can generate passive income for you. So at some point, you can use your passive income to pay for your gym fees, subscriptions, or insurance — a very desirable and motivating goal.

Set a small goal for wealth accumulation or passive income.

Then work out how much you need to pay in each month to reach it as soon as possible. The money you have to invest, you can try to save — you’ll be much more motivated to spend less money and do something for your long-term finances at the same time.

5. Reconsider your subscriptions

Subscriptions work so incredibly well for a reason. We feel like we’re getting something, but we don’t realize we’re paying for it.

The hurdle to signing up for one is not very big. Thanks to paypal, we can get access to Netflix in a few minutes — impulsive decisions are inevitable.
$10 just doesn’t sound like much — and a month is plenty of time to try it out and cancel if necessary.

But most of the time we forget about a subscription. If we notice anything at all, it is only a ridiculous amount of 10$ to 20$, which is deducted from our account.

To get out of a subscription there is a great trick. Investigate how much you really use the offer — maybe an alternative is much cheaper.

Imagine you’ve been watching just one series on Netflix for months. Every weekend, you watch a few episodes. Just so you can do that, you pay around $10 a month for Netflix — but you’ve been doing that for months.

The cheaper alternative could be to buy the whole series for 20$ or 30$ somewhere. Even if it’s more money for the moment, it’s more worth it in the long run.