When it comes to New Year’s resolutions, one of the most common is to get in shape. For many people it implies taking better care of their body, but for just as many others, “getting in shape” means taking better care of their finances. Both goals are intensely challenging, and both are notorious for their high failure rate.
Why People Fail at Saving
People will be tempted to self-sabotage their saving goals in a number of different ways.
A very common one is ego: In many instances, people buy things that bust their budget because they want to “keep up with the Joneses.”
Who among us doesn’t feel envy, or make inevitable comparisons? It’s irrational, but it’s also fundamental to human nature. Even if there are no Joneses to keep up with, we will still make many unnecessary purchases because we think they’ll make us feel better about ourselves.
Another reason why “financial diets” fail is because they require a commensurate amount of willpower, and as everyone knows, willpower is a highly elusive quality. While many people can resist ego pressure and the thrill of immediate gratification for a certain period of time, the longer it goes on the harder it becomes — hence the high failure rate. Like willpower, stamina is not something that can be bought.
How to Make Saving Easier
Even though our egos, lack of willpower and other circumstantial factors can thwart our high-minded goal of saving money, there’s always hope — and there are always ways to make the fight easier. Saving money doesn’t have to be a dour, joyless endeavor if you do it right.
Some ways to make saving money easier are:
1. Make frequent use of auto deductions from your bank account. Make sure that your bills are paid first, followed by money taken out and put into some sort of savings vehicle, whether it’s your savings account or an IRA or a 401k. The point being, have the money taken away before you even have the chance to spend it. Perhaps the best part of setting all that money aside first is that you’ll be able to spend the rest without any guilt.
2. Make a list of everything you buy, and apply the “need vs. want” test to each one. Your old car finally died, and now you need to buy a new one. Do you need a BMW, or do you want it? Or would your needs be met just as well by a second-hand Honda with 10,000 miles on it? In this instance, if you go with what you need rather than what you want, you’ll end up saving yourself a lot of money.
3. Find a “savings buddy.” Before you go on a financial diet, try to find someone to do it with. If you pool your resources with a spouse or partner, they’re the best choice. If they’re not enthusiastic about the idea, find a friend who wants to save as much as you. Shop together, check in regularly, compare progress. Teaming up with someone could go a long way towards helping you achieve your savings goals.
