Well-Intended Strategy Pushing You Into Poverty?

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Is This Well Intended Money-Saving Strategy
Pushing You Into Poverty?


The stone cold truth is people who live by budgets tend to spend more money than people who don’t.

EVG Research Team here, and if you think you’re being responsible by setting a budget, then you’ll want to rethink that strategy when you see the results of this new study.

(At The Elevation Group, we like to tear down old myths about personal finance, investing and wealth.)

We avoid traditional budgeting because it reaffirms The Elevation Group’s arch nemesis — the scarcity mindset.

Budgeting

Rather than finding ways to make MORE money, budgeting puts all your energy into “cutting costs.” And it can keep you from ever growing real wealth.

But as it turns out, that’s just one of many reasons setting a budget is counter-productive.

The Journal of Marketing Research
Says Budgeters Spend More…
AND Spend More Wastefully

Budgeters spend more because setting a limit encourages you to spend to the limit, even if it’s not worth the extra price.

It sounds completely backwards. But a study published in the April 2012 Journal of Marketing Research by Jeffrey Larson and Ryan Hamilton proves it.

Their study involved two groups of subjects. Both groups are told to imagine their car tire suddenly blows out, and they need to purchase a new one.

The first group is given a choice between 6 tires. Some are expensive, some are cheap and some are in the middle. And quality varied in the same way.

The second group was shown the same set of tires. But BEFORE they were able to view the tires, they were asked to set a budget.

This study was repeated 6 times, and each time the group that stuck to a budget spent more money than the group that did not.

Why?

Because the non-budgeters focused on which features were important to them, and only spent what was needed to get them. While the budgeters focused on buying as close to the top of their budget as possible.

Budgeting completely backfired.

It Also Tricks You Into
Settling For Less… FOREVER

The study noticed something else as well.

Non-budgeters tended to look at the features of all the tires, expensive or not.

This let them put cheaper tires in perspective. They may not be the best tire, but they had the features they wanted now. And maybe later if their needs changed, they could buy a higher quality tire.

This gives them something to strive for.

Budgeters, on the other hand, rarely looked at the features of tires outside of their budget.

This led them to believe that the features on tires at the top of their budget — which were actually medium-quality at best — were high quality and worth spending more money on.

Had they looked at all the tires, they may have noticed that the mid-priced tires weren’t worth the extra cost. The low-priced tires may have been a better value.

And they don’t know about higher quality tires, so they do NOT have something to strive for. In their mind, they already topped out.

That’s a perfect formula for settling for less – the exact opposite of The Elevation Group’s philosophy.

At EVG, You Can Always Have More

And we’ll keep repeating it until we banish all scarcity-minded thinking from the world.

Rather than focusing on how to “cut back,” we focus on how to get more. That means having our eye on the prize, and moving towards it.

Of course, saying out loud “you can always have more” will lead to the usual scarcity-minded comments or even cries of “selfishness.”

But these comments forget one thing: the more everyone produces, the more everyone can have because there’s more to go around. That applies to wealth too.

At The Elevation Group, we teach members how to maximize their wealth even in these strange economic times.

Your Partner in Prosperity,

The EVG Research Team

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