How to save money: Make saving specific, external, and social

Saving money isn’t easy. Thirty-four percent of Americans have no money in their savings accounts (Huddleston, 2016) and 61% could not use their savings to come up with $1,000 for an unexpected expense (Tepper, 2018). Personal savings rates in the United States have fallen to the low-single digits over the last few decades (Federal Reserve Bank of St. Louis, 2018).

Saving money is hard in part because, like exercising regularly and eating healthily, it requires us to endure an upfront cost (less money now) to only reap a benefit (more money later) in some distant future (O’Donoghue & Rabin, 1999). Making this tradeoff regularly and reliably requires significant self-control, of which we have only so much to get us by (Hagger, Wood, Stiff, & Chatzisarantis, 2010; Muraven & Baumeister, 2000).

But we can make saving easier for ourselves in at least three ways. We can (1) create saving goals that are specific, (2) make saving contingent on an external process, and (3) ask other people to hold us accountable to save.

Make saving specific

It’s tempting not to put money aside when our present needs for money are clear (my friends want to go see a movie this week!) and future needs are vague and far away (I’ll need some indeterminate amount of extra cash…