Use this simple mental trick to save even more money

It’s easier to save money by tricking your mind.

key point

• By changing the way you organize your time, you can make future goals seem closer and more urgent.
• The researchers found that by thinking about our goals in days rather than years, we were four times more likely to save money.
• The actual time to achieve the goal has not changed, but psychologically, we feel more connected to our future selves when using smaller time units.

Americans love to spend money. Unfortunately, 70% of Americans admit to having bad spending habits that cause them to overspend by nearly $7,500 a year. Unless we change our spending habits and learn how to save, we will soon face a full-blown retirement crisis. The Boston College Center for Retirement Research estimates that about half of working-age households are “at risk” when they retire. That means they won’t be able to have the savings needed to retire comfortably.

What is the solution to the problem? Education or awareness is not the main issue. A whopping 80% of respondents believe they are fully capable of improving their spending habits. The psychological aspect of money is a key driver of making ends meet. While there’s no quick fix, this simple mental tip can help you reach your financial goals faster.

simple thinking shift

When we think about retirement, it seems so far away. The further away the goal is, the less urgent it seems. As a result, it’s hard for us to stick with it, especially when short-term demand pops up.

Published in Psychological Science, researchers Neil A. Lewis Jr of the University of Michigan and Daphna Oyserman of the University of Southern California have an easier way to focus on your goals.

When we think about achieving our goal in a few years, it seems far away, and we tend to believe that we have enough time to make up for it. But by looking at our deadlines in smaller time units, research has found that we are better able to stay on track mentally. Instead of thinking about a year away, think of it as 365 days away.

Time Metrics Influence Our Action Plan

The researchers “provided participants one of two timing indicators for three randomly assigned scenarios. Participants filled in the blanks for when they should start saving, prompting in days or years to match a given scenario. For example, They were asked when they would start saving for 18 years or 6,570 days for college, 30 years or 10,950 days for retirement, or 40 years or 14,600 days for retirement.”

When the participants thought in days, they planned to start saving four times faster than those who used years. why is it like this? Psychologically, time seems closer when we use smaller units. The study found that “events appear to be advanced by an average of 29.7 days when considered in days rather than months, while events appear to be advanced by an average of 8.7 months when considered in months rather than years.”

Although the actual time to achieve the goal did not change, the researchers found that we felt more connected to our future selves when we used smaller time units. This makes it easier for us to forgo current rewards (spending) for future rewards (savings). So investing in the future doesn’t seem like that much of a sacrifice.

The best part is that this simple change does not require willpower or learning anything new. It’s about changing your perspective to help you achieve your financial goals. Want to retire after 25 years? Think of it as 9,125 days. Want to put down a down payment on a house in 3 years? Think of it as 1,095 days. Constructing it this way can help future events seem closer and more urgent.