How to Make Yourself Save Money

Most advisors and financial experts will tell you that the only way to become wealthy is to save. The problem with saving is that most people get more value and joy from spending their extra money than they get from saving it. If you fall into this category, when faced with the choice of getting immediate joy from buying something right now versus saving for some distant time in the future, buying something today is a much more attractive choice.

Why is Saving Money So Difficult?

Imagine you and I were going to meet a week from today. For our meeting, I want to offer you a snack. You can choose a fruit or chocolate. Which one do you want?

When researchers did this experiment, they found that 74% of participants said they wanted fruit a week before the meeting but on the day of the meeting, 70% decided they wanted chocolate. Why did so many people say they wanted fruit only to change their mind to chocolate? It’s the same reason why it’s so painful to save for the future when instead we could spend the money today. (For more, see: Why Saving Money is Important.)
Those who chose the fruit were trying to make a healthy decision. Since the snack was a week away, it was easier to make a smarter choice. But when it came down to actually eating the snack, most of them changed their minds and decided to go for the less healthy snack instead. We put a large amount of value on right now and very little value on the future.
Here is another example: Would you prefer a 15-minute massage now, or a 30-minute massage in one day? If you are like most people, you said you wanted the massage right now. But if I ask you if you want a 15-minute massage in seven days or a 30-minute massage in eight days, what would your answer be?
Did you choose the 30-minute massage in eight days this time? The massage times are the same and the time between each option is the same as the last example. What’s going on here? The same effect is at work. We want it now, whether it is chocolate, massages, spending money, etc. Having a little piece of goodness right now is so much more appealing than having a whole lot more goodness in the future.
This can heavily impact our desire and motivation to save. We are told to save our money today so we can have a great retirement, but what we hear is, “deprive yourself of something you want right now because in forty years it might help you.”
Does this mean we are destined to spend a lot and save a little? If the choice is between guaranteed enjoyment now versus the possibility of enjoyment a few decades from now, then yes, possibly.
So, what’s the solution to the issue with saving money? Flip the script by eliminating your choices to not save. This is done by creating a systematic savings strategy. Rather thanput yourself in a situation where you have to decide between now or later, it’s better to avoid the decision altogether. The solution is generate enough willpower to set up your systematic savings strategy once and then you can forget about it. Here’s how you can do it:

Contribute to Your 401(k)

This is an easy way to save because you set it up once and then it runs automatically without any effort or decisions from you in the future. Every time you get paid, a small piece of your paycheck gets split off and put into your 401(k). The advantage of this approach is that the money doesn’t reach your bank account for you to spend. It also has the benefits of potentially saving you money in taxes. You may even get free money from your company - which is called a company match. If you pay little or no income tax, there may be better strategies but for most people, it’s a great way to save. (For more, see: 10 Ways to Effectively Save for the Future.)

Use Direct Deposit

Direct deposit is also an easy way to save effortlessly. The advantage is that you only have to make the decision to save once. After it is set up, it will run behind the scenes automatically. Instead of receiving a check that you have to bring to the bank to deposit (this takes way too much time and willpower), your paycheck can be automatically and directly deposited into a bank or investment account for you.

Take Advantage of Automatic Transfers

If your employer doesn’t offer direct deposit, you can still create a systematic savings strategy. Use automatic transfers through your bank to transfer money from your checking to a savings or investment account.

For example, you can tell your bank that you want to schedule an automatic transfer of $200 on the first of every month from your checking account to your investment account. These automatic bank transfers are slightly more time consuming to set up. But once they are set up, they run automatically without any other effort or action on your part.

Technology Can Help You Save

There are quite a few apps available that can make saving easier. They range from unobtrusive (rounding up on purchases and saving the difference) to extreme (pulling money out of your bank account based on the application’s algorithm). Because apps and technology change so quickly, the best bet is to search “apps to automatically save money.”

Most people experience the difficulty of choosing to save money that they would much rather spend, so it is best to employ some of these strategies to avoid the dilemma in the first place. (For more from this author, see: The 6 Biggest Sudden Wealth Mistakes.)