If you feel like saving money just doesn’t come naturally to you, don’t stress. You’re not alone.
According to Harvard University Professor Sendhil Mullainathan, “the reason saving is so hard has less to do with self-control and more to do with a scarcity of attention… the psychology of scarcity engrosses us in only our present needs.” In layman’s terms, this means that the difficulty you have saving is not your fault – it’s completely natural to focus more on your short-term needs than your long-term goals.
So there you have it, saving is simply not compatible with human nature. Unfortunately, that doesn’t mean you can give up trying altogether, otherwise “future you” might have a real tough time of things.
So if scarcity of attention is your problem, then the savings solution must be…
Fortunately, there are a number of methods to automate the savings process so you can be fiscally responsible without having to think about it.
Take Advantage of Your 401K
Only 1/2 of Americans with a 401K option have opted into their company’s plan. If you have opted in, great job. Just make sure you’re maximizing your employer’s match; otherwise you’re leaving “free money” on the table. If you’re not taking advantage of your 401K, start now. It’s an easy, tax-friendly way to start saving for retirement that works.
Don’t worry if you’re one of the 68% of Americans that don’t have a 401K, there’s other methods to automate your savings!
Set Up an Automatic Bank Transfer
Most banks allow you to set up an automatic bank transfer, enabling you to lock in a monthly transfer to your savings account. If you know you’ll spend your money if you can see it in your checking account, this type of automatic transfer might keep some of that excess cash “out of sight, out of mind.”
Save Your Tax Refund
If your’e fortunate enough to be getting a refund this tax season it can be a great way to kickstart your savings. You can even plug your tax refund directly into your IRA if you’re looking to get really savings savvy.
Automate Your Savings Goals
If you lacking savings motivation and looking for some gratification then a goal oriented savings program might be right for you. EarnSmart helps you automatically save toward your desired savings goal. We have cash goals for the saver looking to hide away some extra cash. And we have deal-based goals for the consumer looking to “save and spend” responsibly.
Sign-up on our home page and get exclusive access to our beta when we launch in a couple weeks – we can’t wait to be part of your saving solution!