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"Cutting back doesn’t mean giving up the little luxuries."

The following article is written by lecturer in financial planning Dr Campbell Heggen from Deakin University’s Faculty of Business and Law.

It can be very easy to live week-to-week and not really think about how your choices today might impact your future. But the reality is, small changes in your spending behaviour today can make big differences down the track.

Unfortunately, our brains are hardwired to place a greater weight on the present over the future when making decisions (i.e. we focus on the party, not the hangover). This means we find it easier to prioritise smaller, more immediate rewards over larger, slower ones – like long-term savings.

Many experts swear by budgeting – and I agree that understanding where your money goes can be great to identify opportunities for saving.

But let’s face it. Budgets are boring. And sticking to a budget is about as much fun as counting calories (pass the bacon please). So if you find satisfaction in spending, how can you find satisfaction in saving?

How to re-frame your spending habits

Cutting back on your spending doesn’t necessarily mean giving up the little luxuries in life we enjoy. Often there is a lower cost substitute which can replace some of our mindless spending behaviour.

For example, purchasing your daily $3.50 coffee quickly adds up to $24.50 per week. If you forego one coffee per day and deposit $24.50 per week into a savings account earning 2.5% p.a., in one year you will have accumulated $1290 in savings. Not exactly small change.

But if you’re anything like me, giving up your morning coffee is simply not an option (and frankly, neither is drinking instant coffee). There are a number of alternatives for making freshly brewed coffee at home. I personally use a 2-cup moka pot (macchinetta) and a stainless steel insulated thermos for my commute. A $10 bag of ground coffee beans keeps me caffeinated for about two weeks (that’s about 20c per coffee), saving me well over $2000 each year compared with the takeaway option.

Even if coffee isn’t your forte, the same principles apply elsewhere. Spending $10 on lunch two to three times per week could end up costing you more than $1500 per year. You’ll save a lot of this money by simply taking a few minutes to prepare a delicious packed lunch before you leave home in the morning.

How to grow big things from little things

Behavioural science can help us make small changes with big impact on our long-term savings goals. Here are some of my favourites:

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Originally published on this.