2 science-based ways to save more money
- If you’re struggling to save money, science can help.
- Changing the way you think about saving and understanding how you think about time can increase savings.
- You can also create vision boards, visualize your achieved goals and automate your savings.
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Saving money can seem overwhelming, as it usually means spending less on what we want or like. But it doesn’t have to be.
Understanding how you think about money – and changing that mindset with the help of a few simple tips – can be an effective way to prepare yourself for success when it comes to your personal finance goals.
Here are some science-based ways that you can change your behavior to save more money.
1. Use your emotions to motivate yourself to save
Emotions have a powerful effect on our behavior. The 2019 sentimental savings study found that using guided activities that activate emotional responses can improve personal saving habits.
The study compared two approaches to financial literacy. One was a more traditional approach, which included a slide show that introduced participants to concrete and valuable information about personal finances. It included things like the importance of saving, statistics on how unprepared American households are for retirement or emergencies, the power of compound interest, and various ways to save, such as through a savings account, money market account and certificate of deposit.
The second approach incorporated guided activities that included visualization, creating representations of savings goals using art supplies, recalling memories, and personal longing to help with emotional activation. He also explored scenarios or beliefs about participants’ money.
Those who participated in the psychology-based exercises performed better and experienced a 73% increase in their savings rate, while those who participated in the more traditional approach reported only an increase. 22% of their savings rate.
Putting these ideas into practice
Looking at the big picture or setting goals based on your values can help add an emotional element to the savings process and increase your motivation to take control of your finances. This can be done at home, alone, in a group or with a partner. Create defined goals by using tools like a poster, vision board, or by thinking about what you are saving for and imagining what it is to get there. Maybe it’s owning a house, helping a family member, or going on a big trip.
Depending on your starting point, the study indicates that there are different approaches that may be more effective. For example, if you don’t already feel like saving, then focusing on the benefits of saving by linking it to your values or future goals is a good place to start. This will motivate you to start taking the first steps.
If you’ve already made a commitment to saving or want to increase the amount you save, reducing the negatives of saving by doing things like learning to live comfortably on a budget might have a bigger impact. If you give yourself a budget that allows you to meet all of your goals, you might start to think differently about your savings.
There are apps that can make budgeting more fun or look like a game, and you can link them directly to your accounts. One of them is Mint, which can divide small expenses into categories such as purchases, bills, and transportation. Whether you like to automate your savings or do things manually, there are a variety of budgeting tools that can help.
2. If you’re the type to procrastinate, consider automating your savings.
The way you think about time and the way you think about your life can have an impact on your savings habits. According to a paper published in 2014, it is estimated that those who perceive their life as a series of repeating events, or in cyclical terms, save 74% more than those who think about time in a linear fashion, with a stronger concept of the past, of the present and the future.
Those with a cyclical perception assume that their future situation will be similar to their current situation. They therefore focus on saving now rather than deferring to a future event. This category of thinkers will probably already be savers. On the other hand, those with a more linear view of time tend to be more optimistic and assume that they will be able to save in the future, so they postpone things.
If you think about time in a linear fashion, automating your savings so you don’t have to deal with it every month can be a smart move. This can be done either through your bank or directly through your employer each time you receive your paycheck. Either way, make sure that a portion of your paycheck is automatically sent to your retirement, high yield savings, or other account before you even see it.