How to Encourage Saving Habits

Marina Joseph – Art in Tanzania Internship

Setting money aside for savings, like so many other things in life, is a habit that must be created. You should do all you can to foster a savings habit if you want to see your savings rise. Instead of being a burden, putting money away can become a way of life. If you’re having trouble getting into the habit of saving, try the following methods or approaches to stay motivated:

saving money

Begin small: To inspire non-savers to begin saving, it is critical to question any misconceptions that might be holding them back, such as the notion that saving is too difficult or that they must make significant sacrifices to make it worthwhile. Starting small (by establishing short-term objectives and defining practical lifestyle changes) makes saving feel possible, builds trust, and feels ‘easy.’

Show progress toward a target: Having a specific and concrete goal, as well as a strategy for achieving it, gives people something to concentrate on, and research shows that as these goals are reached, savings patterns will form.

Reward yourself for completing small milestones: Depending on the duration of your target, you will reward yourself at various milestones. This allows you to monitor your progress and keeps you motivated to keep saving. These incentives should be enjoyable activities that you would not usually do but are still small and reasonable. It might be a day off (if you can take one), a picnic in the park, dinner at a nicer restaurant than normal, or some other fun activity. Only don’t spend all of your money while you’re enjoying your tiny reward.

Make it social: research from other industries shows that sharing commitment devices with friends and family will help people stick to their goals (typically via social media.) Commitment contracts go a step further, imposing a penalty if you don’t keep your word – but these strategies have yet to be proven in terms of saving behavior. Similarly, studies have shown that saving with friends and family is more motivational.

Form a habit: research shows that once savings habits are formed, they are more likely to be sustained, and that among ‘rainy-day savers,’ the savings habits they acquired as children are carried over into adulthood and become self-reinforcing.

Automate your savings: Setting up an automated system of moving your money around is one of the simplest ways to get into the habit of saving. Whether you have money from your paycheck automatically deposited into a savings account (including a retirement account) or you do an automatic transfer each month, getting your savings transferred around automatically will help you change your lifestyle to what you end up as take home pay

View saving as a game, not a chore: framing saving as a challenge makes it more appealing and counters the belief that it is too difficult or tiresome to think about. This is partly due to a lack of financial expertise in identifying practical ways to cut costs and save money.

Provide information and personalize it: information must be pitched at the appropriate level to avoid being patronizing.

People want to see simple and relevant advice: anything that ‘people like me’ can do