Everyone has the ability to 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 just 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. This 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 which makes your own goal seem more possible and even more rewarding.
When setting a savings goal, Behavioural Economist, Erik Vermeulen, suggests you focus your efforts and avoid getting sidetracked by impulsive spending. He suggests the following:
Your goal must create SECURITY
We fear loss. This ultimately impacts our behaviour and our ability to set out on a course of action. So, 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 key. Decide how much money you want to save, and by when, then 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
This means you have to feel in control of your own goal. After all, no one likes abdicating 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.