{"id":4550,"date":"2023-07-26T16:05:05","date_gmt":"2023-07-26T23:05:05","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=4550"},"modified":"2025-11-07T08:51:11","modified_gmt":"2025-11-07T16:51:11","slug":"how-to-trick-yourself-into-saving-more","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/how-to-trick-yourself-into-saving-more\/","title":{"rendered":"How To \u201cTrick\u201d Yourself Into Saving More | How to Save Money and Have a Social Life"},"content":{"rendered":"
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How To \u201cTrick\u201d Yourself Into Saving More<\/h2>\n

There\u2019s never been a better time to re-examine how we\u2019re managing our finances and to make some moves to save more. Some 61% of Americans \u2014 about 203 million people \u2014 are living paycheck-to-paycheck<\/a>, and 13% of us are spending more than we earn<\/a>. Not only is this causing us stress in the here and now, but it\u2019s also leading to lasting regrets for the future. Nearly 70% of Americans have financial regrets, including not saving soon enough for retirement, having credit card debt, and not having an emergency fund.<\/p>\n

The easy part, of course, is recognizing that we need to change our habits. The more challenging part is making the changes and then sticking to them. Researchers may have an answer. It has to do with thinking small. A study from the University of California, Los Angeles, and the University of London (published in the INFORMS<\/a> journal, Marketing Science)<\/em> applied a behavioral finance trick known as \u201cmental reframing\u201d with success. They conducted a study with 2,000 customers of a personal finance app that allows users to save and invest small amounts of money. New users who signed up for a recurring deposit program were randomly offered the choice of committing to monthly deposits of $150, weekly $35 deposits or daily $5 deposits.<\/p>\n

Here\u2019s what happened: Savers were more likely to commit to and stick with a personal savings regimen focused on smaller, daily amounts over the large, intimidating per-month goal. In fact, quadruple the number of people chose to enroll in the recurring deposit program when given the $5-a-day option versus the $150-a-month savings goal.<\/p>\n

The appeal of the smaller savings option also leveled the playing field between low- and high-income consumers. When presented with the $150-a-month savings program, higher-income consumers signed up at a rate of three times that of lower-income consumers. When deposits were framed as $5 a day \u2014 which also gets you to $150 after a month \u2014 the participation gap was completely eliminated.<\/p>\n

Perception And Convenience Matters<\/strong><\/h2>\n

It\u2019s not a huge stretch to see why breaking down larger-dollar goals into bite-sized chunks is more digestible. Big numbers like saving $1 million for retirement can feel daunting, even when we fully know amassing enough money for retirement should take decades and also depends on the investment growth of the money that you save.<\/p>\n

One thing that keeps a lot of us on the sidelines is how we measure the opportunity cost of those dollars we don\u2019t have to spend now. Putting away a dollar for tomorrow means one less dollar to spend today. However, the study\u2019s authors demonstrate the mental calculation of giving up $5 a day is much easier to overcome. It\u2019s a comparatively small sacrifice (like giving up a snack or magazine) than mustering up the resolve to part with $150 all at once.<\/p>\n

Reframe Your Savings Goals<\/strong><\/h2>\n

If you\u2019re facing a savings goal that seems insurmountable, cut it down to a less intimidating size with some simple math. Here’s some examples:<\/p>\n