What do you do when the best of intentions to save regularly turns into frustration, resentment, anger, and a general feeling of complete failure?
You need some savings motivation!
Here are five things you can do today to shake off yesterday’s failure and turn it into tomorrow’s success:
1. Stop Chasing Interest Rates
A reliable bank that you’ve patronized for a long time pays you a 1.0% interest rate on your savings. Fantastic! Suddenly, you discover another bank that offers an enticing 1.2%! Do you immediately head over and apply for a new account?
Unless you have a large stash of money in savings (in which case, you don’t really need this article for motivation, you seem to be doing just fine), a small change in rate will be insignificant in terms of interest. (Proponents of compound interest – don’t email me. Until you’ve first started to save, you shouldn’t consider building on it.)
If you’re just starting out saving, building capital is your primary goal. Don’t let rate-chasing take precedence over finding ways to save more money. Use that energy to find new and innovative ways to create savings funds, and worry about a few percentage points when it will actually make a difference.
2. Use a Series of Smaller Goals
Most people would agree that setting overly complex, large, or seemingly unachievable goals can demotivate you at the first sign of trouble. So if breaking down goals into manageable chunks is the norm for any other endeavor, why not do it for savings?
As a good rule of thumb, I make no single savings goal larger than $1,000. Even for seemingly simple goals like a vacation, I will break things down (airfare, car, spending money) and save for each item separately. What a great feeling every time a mini-goal is fulfilled! And with so many of them, hopefully this will be quite often.
This also helps to prioritize mini-goals (airfare, for example, is a requirement to take the vacation, but spending money is not – therefore if I run out of money that month, I will fund the airfare first).
This advice has the added benefit of confusing you about where your money is going (with savings, that can be a good thing). I have so many “streams” of savings set up in my current envelope budgeting system, I rarely realize how much I’m actually saving in total. All those little goals aggregate to a rather remarkable sum, when done consistently and over time.
3. Create a Graphical Motivator
I was driving by a local park last week and noticed a large billboard announcing fund raising for a new community building. The billboard quickly communicated that the goal was 98% complete with a large, red “thermometer.”
Instantly, I was motivated to contribute and help the park get the last 2%. Punchy graphics can communicate progress, history, or goals with incredible ease, and can be excellent motivators to continue. Here are some ideas you can use:
- Progress Bar – Just as in the example of my local park, this tool expresses your progress as a percentage of the total goal, and uses a clear visual method of communicating how far you’ve come, and the remaining distance to get there
- Balance Chart – This is one of my favorite tools to use, especially for net worth, but it works equally well on savings. Simply graph your total savings balance, or the aggregate of individual goals (easily done in Excel) over the last X number of months, and rejoice when you see a strong upward trend!
- Savings Ladder – If you’re working on savings goals (or sub-goals) one at a time, a neat technique is the savings ladder. It’s essentially a bar graph that shows month-to-month progress, but each goal is “piled on top” of the previous goal in following months. The end result should be what looks like an upward, multi-colored staircase.
4. Get Family Involved/Make It Fun
There’s nothing quite like a little friendly rivalry to get a saving account growing! Creating financial games with family can be a fun and mutually motivating means of raising a lot of money quickly and giving your family members a reason not to spend. Here are just a few of the games we play at home:
- Penny Wars – A coin-collecting classic. Two competing jars are set up, each labeled with a team. Pennies add to your balance, while any other coins subtract from it. In the end, there’s only one winner, but both jars go into a savings account.
- Cash King – This one works well if you use a lot of cash for day-to-day expenses. Each week, the person with the most cash left over gets to use part of it for a fun expense!
5. Now You See It, Now You Don’t
You read it in book after book, blog after blog. Your Mom tells you to do it. Your Aunt tells you to do it. So why haven’t you made saving automatic yet? For the same reason it works like a charm once you do – because it takes effort and some paperwork to get it set up. And it’s precisely why you’re reluctant to change it once it’s in place. And that, my friends, is exactly what we want – a savings plan that we’re hard-pressed to change.
Do you think I know how much money goes into my employer’s retirement plan every month? I have a general idea, but I haven’t tracked the exact amount since I started participating. My only day-to-day concern is my take-home pay. As for the retirement plan, all I know is that every time I log in to check on it, the balance gets bigger.
Take 15 minutes first thing tomorrow, and fill out paperwork that will direct deposit money from your paycheck into a savings account. Or if direct deposit is not available, set up an automatic transfer for each time you get paid. Then leave it alone, forget about it, and watch it grow.