Mind Over Money (page 2 of 3)

More on:

• Budgeting
• Ways to Save

Visualize Your Goals

Let's say you're 31 and you want to retire in 25 years. The key is to make the goal as concrete as you can, says Zweig. Pick your birthday circa 2033 as the day for your retirement goal. Then ask yourself, What do I want to do when I retire? Do I want a villa in Tuscany, a boat slip in Fort Myers, a condo in Waikiki, or a paid-off mortgage where I am right now? Of course, it's different for everyone. But you've made retirement tangible: You have the date. You have the goal. Then you give it a name. It becomes "The Condo in Waikiki Fund." You put a little Hawaiian music on your desktop, or cartoons of pineapples -- whatever reminds you of your goal. Put your account statements in a manila folder and decorate it with Hawaiian beach scenes.

Sound corny? Sure, but what you're doing, Zweig says, is building an emotional environment that you can save in. All these things work together to motivate you, and then when you see the pair of shoes, it will be easier for you to say to yourself, This is a choice between shoes and Hawaii. Suddenly, you can leave the shoes in the store.

Rally your team. Use your friends and family as a way to discipline yourself. Tell them what your goal is, and ask them to remind you if you're about to spend money on something you won't need. (Tell them you won't get cranky and will appreciate the help.) You can even do this on the Internet. Dean Karlan and Ian Ayres of Yale just launched a website called stickK.com, which lets you post your goal, notify your friends, and set up penalties if you fail. It worked for both founders, who lost a significant amount of weight by pledging a significant amount of money if they didn't drop pounds. But you could also use it to build an emergency stash, increase your contribution to your 401(k), or amass college savings for your kids.

Break it down. Stephen Brobeck, executive director of the Consumer Federation of America, says that one reason many middle-income families don't save is that they don't believe they can come up with big enough sums of money to do it effectively. The fact is, he says, small amounts can be quite effective. Start with your change. "It sounds trivial, but we have story after story of people who accumulated hundreds of dollars that way, realized they could do it, and worked harder to get more," he says. Then add an automatic transfer from checking to savings every month. Some banks, like ING Direct, are even willing to transfer money weekly if moving smaller amounts more frequently sounds easier on your wallet.

Finally, recognize that the saving process is actually healing. It makes you feel better -- a better person, a better spouse, a better parent -- to know that you have something put away for your future. Says Brobeck, "You may have to make sacrifices in the short term, but you'll feel so much better in the medium to long."

Late one night I stopped at one of those 24-hour gas station mini-marts to get myself a fresh-brewed cup of coffee. When I picked up the pot, I could not help noticing that the brew was as black as asphalt and just about as thick. "How old is the coffee you have here?" I asked the woman who was standing behind the store counter.

She shrugged. "I don't know. I've only been working here two weeks."

-- Peter Culver

Sponsored Links