How to save with confidence
17 September 2021 | Others
Everyone can save something. Having a goal is the first step. “Start where you are, use what you have, do what you can.” This Arthur Ashe quote is relevant to many things in life, even savings. You don’t need bucketloads of money to save, you only need to set some goals and start.
When setting your savings goals, make sure that your plan allows you to celebrate the small victories along the way and not only the main aim. Giving yourself credit throughout the process builds confidence in your savings plan.
Behavioural economists agree that the best way to achieve success with something is to identify a specific long-term goal with built-in intermediate success measures, making your own goal seem possible and even more rewarding. Don’t forget to celebrate the small wins along your savings journey.
When setting a savings goal, focus your efforts and avoid getting side-tracked by impulsive spending. Here are five easy-to-implement tips to make saving easier.
Your goal must create security
We fear loss. This ultimately impacts our behaviour and our ability to set out on a course of action. Having a goal that offers you a sense of security can be a very powerful motivator.
Your goal must be measurable
Being able to measure your progress is vital. Decide how much and by when you want to save money. Include short- and medium-term milestones into your plan of action to plot out your savings journey. Seeing this picture clearly can be a powerful motivator.
Your goal must have autonomy
Autonomy will help you feel in control of your own goal. After all, no one likes surrendering control of something near and dear to your heart. The more control we feel we have over the outcome of our savings plan, the more likely we are to continue contributing towards it.
The more control we feel we have over the outcome of our savings plan, the more likely we are to continue contributing towards it,” says Erik Vermeulen, behavioural economist.
Your goal must be relevant
If you’re feeling lukewarm about something, it can’t be that important to you. So, make your savings plan relevant and personal to ensure that you maintain interest in it.
Your goal must be exciting
If you’re not excited about the process of saving and the outcome, it’s unlikely you’ll be motivated to keep at it. Excitement triggers the release of dopamine in your brain, an essential hormone that regulates joyful behaviour.
The best way to learn savings habits is to make realistic, sustainable changes to your behaviour and lifestyle. According to Vermeulen, significant changes may take a lot of effort and constant tough choices, making them easier to default on. So, instead, start small and make it manageable. Partnering with a professional can also help you set realistic goals and make it easier to stick to them.