Psych Yourself Into Spending Less, Saving More For the Future

Use these mind tricks to get the willpower to build cash reserves

change purse that is made of a brain cartoon illustration

chris gash

Linda Stern

En español

Published April 12, 2021

There are two kinds of people, says consumer finance expert Eesha Sharma: Those who love to shop and those who love to save. Savers tend to make good shoppers, as they often bring their frugality and long-term vision to the task. But how do you get people who love to spend now to put more money away for later? The answer, Sharma says, is to use mind games to lessen the pain and maybe even make it joyful.

Sharma's recommendations are especially important nowadays. The past year has put undue financial hardships on many of us. At the same time, who among us, trapped at home, in isolation, hasn't felt a frisson of happiness when treating ourselves to something online? Impulse e-shopping has become a 24/7 temptation, and the stresses and dullness of quarantined life can fan the flames of that desire.

Here's how to make yourself feel similarly giddy when you tuck money into your bank account.

Pair the bitter with the sweet

One way to get yourself going on a task you're not enthusiastic about is to pair it with something pleasurable. Just as binge-watching Bridgerton can make time on the treadmill easier to take, rewarding yourself now can make saving for the future feel like less of a chore. So set some matching rules for yourself by using a concept known as “temptation bundling,” suggests Sharma, an assistant professor of business administration at Dartmouth College. Whenever you pay to stream a movie, put the same amount in your savings fund. If you're splurging on feel-good items like moisturizer or kitchen gadgets (my particular temptation), add an equal amount to savings.

Break it down

Which is easier — saving $5 a day or $150 a month? Mathematically they're the same, but psychologically they're very different. When social scientists at the University of California-Los Angeles, and the University of London studied which plan was more likely to encourage saving among new users of the Acorns financial app, they found a huge advantage for the little-bit-every-day approach. By suggesting that users make recurring deposits of $5 a day, the researchers got buy-in at quadruple the rate they got by suggesting deposits of $150 a month. They also got low-income users to participate at the same rate as high-income users.

So don't wait until you have a sizable amount in your checking account. Save small. You can arrange to sweep extra change from purchases into your savings automatically via Acorns or Chime.com, or by using Bank of America's Keep the Change program. Or save small with a jar on your kitchen counter.

Imagine the future you

"When you're trying to encourage yourself to save, you need to focus on the benefits of saving,” Sharma says. “Envision yourself as that person in the future enjoying those savings.” If, for example, you're saving for a car, think of the fun you'll have choosing that perfect model, the joy of being able to afford it, and the road trips or errands that will be so much easier and more pleasurable once you own it. If it helps, don't even think of it as “savings” at all; think of it as “future spending” on a dream vacation or that perfect retirement abode.

Put it on autopilot

Of course, nothing works better than taking choice out of the matter. Increase your automatic paycheck contributions to your retirement account. Open a savings account or mutual fund account and direct the institution holding it to automatically draw savings from your checking account every paycheck or every month. You'll save without the psychic pain of having to actively choose saving over spending. How's that for a good trick?

Linda Stern, former Wall Street editor for Reuters, has been covering personal finance since the 1980s.

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