Sunday, March 04, 2007

Developing Savings Momentum

Here's a counterintuitive-but-true thing about my savings habits: I save faster when I'm closer to my goal. Getting my tax refund direct deposited to my "Mini-E" savings account at ING put me at $733.08, a scant $276.92 from the $1,000 goal, and I've been throwing money at it ever since. Last pay period, I found an extra $41.92 (in addition to my normal $25 automatic deposit). This pay period, the account has already gobbled up an extra $48.04 (the amounts are odd because I like round numbers, and I always deposit an amount that brings the total account balance to a multiple of $25—I know, it's a little Rain Man, but it works for me). And just today, I set up another extra transfer, for $25. It's sort of like the impulse to buy, this impulse to save—it really has remarkably little to do with my desire to attain the actual goals I'm saving for (because "have $1,000 to keep around in case of emergency in addition to the $1,000 I already keep in a CD in case of emergency," frankly, isn't a particularly exciting goal in the sense of actually attaining it), and lots to do with my desire to beat the system I've set up for myself—to move on to the next savings goal and get going on that. When the goal is close, I get itchy about the possibility of meeting it, and soon.

What this makes me wonder, of course, is should I be setting goals in smaller increments? I think of my savings goals in "units" of $1,000. I say I'll save $1,000 for emergencies, $1,000 for travel, $1,000 for investing...et cetera. If I thought of my goals in units of, say, $500, would that momentum kick in faster?

2 comments:

Tim said...

you should set near, medium, and long term goals. Your goals should be based off of actual need, though. How you get there, whether multiples of 33 or 25 or 1000, makes no difference so long as you can meet your end goals for the time period you've decided. Whatever works for you is what is important.

Empty Spaces Inc. said...

there's always that psychological boost when your near to acheiving your goals.
and then there's the rush of victory followed by the setting of even bigger goals!!!