Research undertaken at Stanford University concluded that people struggle to save as they don’t make a mental connection between our current situations and the future.
To combat this, people may find it effective to use a retirement fund calculator, showing how much they’d need to save in order to live a comfortable life once they are too old to work a full time job.
A study at New York University suggested that using apps such as AgingBooth to see ourselves as elderly can help us make the connection, due to the reminder that ageing is a reality.
Again relating to visual thinking, seeing goals, monetary amounts or incentives in image form can provide positive encouragement when saving. Many choose to make collages of the things they one day hope to own or pay for, such as their dream home or car, while others appreciate the ability to see the numbers rising on their online bank statement.
Don’t Spend Your Bonuses
Sendhil Mullainathan of Harvard University explains that when people receive bonuses, their first inclination is to celebrate by spending it all. Ideally upon receiving a bonus, you’ll pretend it didn’t happen, instead paying the money into a savings account for the future.
This method can also be replied to tax refunds or transportation reimbursements, as every little amount can help you achieve your savings goals.
Sign a Contract
By promising to succeed with the motivation of disincentives and rewards, you’re almost three times more likely to succeed, according to StickK, a site designed to create ‘contracts’ that promote commitment to your goal and enlisting a friend or relative as a referee.
If you respond well to disincentives, ask your friends or family to hand out a ‘punishment’ when you don’t reach your goals. For example, all household chores falling on you for a month!
If you prefer positive reinforcement, try telling a friend about your plans, allowing them to provide support when you need it. This will also give you someone to discuss your struggles or accomplishments with, which is a positive way to stay involved and on track.