When it comes to building wealth, we all know the basics: save more, spend less, and invest wisely. Yet, despite our best intentions, certain critical wealth-building moves often fall by the wayside. Here are five powerful, research-backed strategies that many people know would improve their financial health but rarely implement.

1. Harnessing Scarcity and Urgency for Financial Gains

We often overlook the psychology of scarcity, but it can be a game-changer in building wealth. Just as businesses use scarcity to encourage consumer action (think limited-time sales), you can use this principle to spark your own financial discipline. Set tight deadlines for yourself, such as committing to saving or investing by a specific date. The perception of urgency can be a powerful motivator, encouraging you to move from financial intention to action, rather than delaying your progress.

Why it’s skipped: It’s easy to let goals slip without consequences or deadlines. When you reframe your goals with deadlines or limited opportunities, your sense of urgency is heightened, making you more likely to follow through.

2. Applying the “Fear of Loss” to Spending Habits

The fear of loss is a stronger motivator than the desire for gain—a phenomenon known as loss aversion. This principle can work wonders when it comes to reining in spending. Instead of focusing on potential gains from a purchase (like excitement or convenience), consider what you might lose: future savings, peace of mind, or an opportunity to invest. By framing your spending decisions around what you stand to lose, you might find it easier to curb unnecessary expenses.

Why it’s skipped: Most people are more attuned to short-term satisfaction than long-term consequences. Reframing choices with a focus on loss can make the impact feel more immediate and help avoid impulse spending.

3. Setting Boundaries with Analysis Paralysis

With so many investment options available—stocks, real estate, ETFs, mutual funds—many people fall into a trap known as analysis paralysis, where too many choices lead to inaction. To combat this, apply the “Which One?” strategy. Limit your choices to two or three investment options based on your research, and decide within a set time frame. This approach not only simplifies the decision-making process but also drives you to act with confidence, cutting through the overwhelm of endless possibilities.

Why it’s skipped: The abundance of options can be paralyzing, making it easier to delay a decision than risk making the wrong one. The “Which One?” strategy helps narrow focus and reduces the anxiety that comes with choice overload.

4. Leaning on Authority and Trust-Building

Creating wealth is often about more than just the numbers; it’s about building trust and authority, especially in professional and business contexts. By establishing yourself as an expert or trusted advisor in a specific field, you open up opportunities for collaboration, higher-paying clients, or promotions. Even in a career or side business, you can work on cultivating this trust by consistently demonstrating value, whether that’s through quality work, transparency, or responsiveness.

Why it’s skipped: Building trust takes time, and many people prioritize short-term gains over the sustained effort required to become a trusted authority. But investing in trust is investing in your long-term earning potential and network strength.

5. Using the Decoy Effect for Smarter Investing

The “decoy effect” is a psychological tool often used in marketing, but it can also guide your investment decisions. For instance, if you’re debating between two investment options, adding a “decoy” (a third, less desirable option) can help clarify your choices, making the better option appear even more favorable. For example, comparing high-fee mutual funds with low-fee index funds can help you appreciate the benefits of the lower-fee option, which may have felt ambiguous otherwise.

Why it’s skipped: Most people don’t apply behavioral psychology to their own decisions, even though doing so can be incredibly effective. The decoy effect helps you evaluate choices more clearly and make smarter, less impulsive financial decisions.

Final Thoughts

Wealth-building isn’t only about the mechanics of budgeting and investing; it’s also about understanding the psychology that drives our financial behaviors. By harnessing concepts like scarcity, fear of loss, and trust-building, you can not only strengthen your financial strategies but also take intentional steps towards long-term wealth.

For more in-depth insights on how to build wealth effectively, check out the From Broke to Building Wealth ebook and audiobook at https://purplemu.com/building-wealth/.