Grow Up Rich

Wednesday, May 24, 2006

How Do I Save When I'm Always Out of Money pt. III

Over the past week we've discussed the first two rules for kick starting a new savings program. The rules are:

1. Only change one thing at first.
2. Make a change that gives you pride or enjoyment.

Today it's time to discuss our final, and arguably most important rule:

3. Make the impact of your change visible.

How many times have you made a new years resolution and broken it?

How many times have you started a diet and then cheated or gained back all of the weight?

You see, the toughest part of any major change in life is sticking to the program. Studies show that people tend to give up and quit on life changes before they become a habit and the most common reason is because people feel like they have stopped making progress.

Take a diet for example. Nearly everyone does well the first week, and as the pounds begin to drop off your commitment to the diet grows, the problem is that you can't keep losing weight at the same rate forever. At a certain point the body plateaus and the weight begins to come off slower (or not at all). As soon as the results start going away people tend to quit or cheat. They figure "I'm not losing weight anymore anyhow, so why diet?".

What most people never find out, however, is that if you kept dieting you'd break through that plateau and have another round of weight loss. Every change in life has slow downs and failures on the road to success, so if you quit when it gets tough, you'll never see any change through to the end!

Well money works in the exact same way. When you start saving it feels great, because it's probably something you've never been able to do before. Over time, however, we get impatient. Our money doesn't seem to be growing fast enough, or it doesn't seem like we're saving enough to reach our wealth goals. This is when we're likely to quit.

As we've discussed on this blog before, the most powerful wealth-weapon is time. Letting your money grow is like pushing a snowball down a hill, it isn't impressive at first. If you're watching the snowball from the top of the hill all you would see was a small snowball rolling slowly out of sight. But if you were watching at the bottom of the hill you'd see a huge fast moving snowball flying towards you.

To stick to our savings plan we have to give ourselves a constant reminder that our snowball (our savings) is going to be fast-moving and huge someday! The best way to do that is to constantly keep a visual reminder of your progress.

Graph Your Progress
When you start your savings plan, create a simple graph (in Microsoft excel it's easy) that charts the amount in your savings account. Every week, make your latest deposit (no matter how small) and update your chart. Print the chart out and put it in all of the important places in your life (your desk, your office, on your refridgerator, etc.) . This way, when you're feeling down you'll have an instant way to see that even if it feels slow you really are making progress.

Graphing your savings helps in another way too. When you do have a setback (if you dip into your savings) it will show up on your graph and motivate you to get back with the program instead of quitting.

Before you know it, updating and printing out your chart will become a sort of wealth building ritual for you, a time each week to positively reinforce your savings goals and congratulate yourself on a job well done.

A simple wealth chart may look like this:

It may seem like a simple idea, and that's because simple ideas are the easiest to stick to! Remember, our goal by making our progress visible is to stack the deck in our favor and prevent ourselves from quitting.

Of course, a graph isn't the only way to make savings progress visible you could try one of many other ideas like:

-Writing a goal contract with yourself and displaying it
-Buying a calendar and writing your account balance in it first thing each day
-Creating a symbol you "fill in" like a thermometer or a piggy bank. Every time you add to your savings you can color in your symbol until you reach your goal.

The ideas are endless, so just make sure that you choose something that is motivational to you. So what are you waiting for? I know several of you have started saving already, since you've discussed it in your emails. I'd love for you all to start posting your successes and issues in the comments section so we can all help motivate each other.

Remember, your dream lifestyle and wealth goals for tomorrow only start with a small change today!

Until next time.



  • Can you email me that graph so I could put in my own numbers?

    I don't know how to do that myself.

    By Anonymous Jane, at 9:00 PM  

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