10 Principles of Psychology You Can Use to Improve Your Money
Psychology is an aspect of knowledge that can be applied to various aspects of human existence including money. As indispensable as money is with various notions of using it to buy success and happiness, it is one thing that can make life meaningful. We need money for our everyday living. The following principles will help in to improve our money:
- The principle of reciprocation. This principle explains the law of reciprocity that tells how People tend to return favour in cash or in kind. When a favour is shown to an individual, there is the tendency for that person to pay back. If you give your colleague some money for his birthday celebration, you will be given probably 2 multiples for your next birthday or any other thing.
- The principle of consistency and commitment. This principle explains how people can be consistent to a course of action they are committed to because they take pride in being committed to their words. You can explore this principle to get 20 people who will contribute some money for a half a million dollar project. This way, they will be committed to giving you the money at a specific time they have promised. Children often use this principle unconsciously to get money from their parents.
- The principle of social proof. This principle relies on number and quantity. People tend to do what is more prominent in a particular setting. A giving contest can be arranged where people are made to donate or contribute money in public. If 30 out of 50 donate a higher denomination, the other 20 are likely to follow suit by increasing their donation.
- The principle of liking. This principle is based on likeness. In applying this to improving money, people who are naturally drawn to you will give you money when asked than those who do not like you.
- The principle of authority. People in position of authority or influential people are revered and respected by everyone. The dress, car, house and other things that people possess can serve as their authority. When in need of money to start a project, these things could be looked for to know those people that are likely to give out freely. In another vain, dress well to meet a powerful person for financial assistance and you will be well attended to.
- The principle of scarcity. If you want to get more profit from a useful product, make it scarce and unavailable. People will rush the available ones at higher prices thereby leading to higher gain.
- Exposure theory. This theory explains the fact that the more exposed we are to something, the more we tend to appreciate it. You can consistently sell your idea for a specific group in order to get money.
- The decoy effect. The preference of consumers changes when they are placed with third option. This can be used to break monopoly power by introducing similar products to existing ones.
- Buffer effect of social support. You can draw financial assistance from colleagues and friends.
- Propinquity effect. The more we interact with people, the more we like them. You can build confidence and trust by interacting with others. These people can help you financially.
A Selection of Money Quotes
“Money is better than poverty, if only for financial reasons.” ~Woody Allen
“I don’t like money, actually, but it quiets my nerves.” ~ Joe Louis
“Budget: a mathematical confirmation of your suspicions.” ~ A.A. Latimer
“Money is like manure. You have to spread it around or it smells.” ~ J. Paul Getty
“We may see the small value God has for riches, by the people he gives them to.” ~ Alexander Pope, Thoughts on Various Subjects, 1727
“Too much money is as demoralizing as too little, and there’s no such thing as exactly enough.” ~ Mignon McLaughlin, The Second Neurotic’s Notebook, 1966
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