A friend of mine once told me that any goal you want to achieve is about 80% behavior and about 20% head knowledge. We all know what to do to take control of our finances – spend less, dump consumer debt, and save more. However, as simple as it all sounds, it is not easy. Life and our emotions can get in the way of your goals.
I say if you can’t beat it, trick it. Take the following steps to trick yourself into better financial behavior: (Some may sound crazy but they work.)
1. Can’t get the ball rolling on saving? Consider saving by setting up a payroll deduction into a savings account. That way you save it before you even have a chance to spend it.
2. Struggling to keep your hands off your savings? Try to use the hide feature on your online account to hide your savings account. If it is out of sight, it might be out of mind.
3. Still feel like you can’t trust yourself if the savings is at the same bank with your checking account? Consider moving your savings account to a different bank where you do not have immediate access to funds. Just don’t forget it’s there for when you do need the money.
4. Do you have a budget but have a hard time actually following it? Consider identifying areas where you overspend (eating out, groceries, clothes, etc.) and using cash for those items. It makes you more mindful of your spending and it creates an automatic boundary.
5. Do you want to increase your retirement plan contributions but feel nervous about the increase? Consider contacting your retirement plan provider about a feature called auto-escalation. This gives you the option to automatically increase your contributions annually, in many cases by as little as 1%. Tip: If you typically get an annual pay increase, consider timing the automatic increases a month after your pay increases so you won’t feel the difference.
A lot of times, we know what we need to do with our finances. The hard part is actually doing it. These steps may seem simple but they could be just the boost you need to help you reach your financial goals.