How to Save More Money -- Change the Way You Think About It

How you set your goals is just as important as having them. Find out how to save more money by working with your personality.

Anna Wroblewska
Anna B. Wroblewska
Sep 14, 2014 at 7:00PM

Sometimes goals can make us feel glum and discouraged, and other times they can feel invigorating and inspiring. Why is that? It might have something to do with the way the goal is described -- depending on your personality, describing something one way or another can have a huge effect on how you perceive it. 

The same goes for financial goals: most of us would like to save more money, but we often struggle to make it happen. What if, just by understanding the way your mind already works, you could reframe your goals to encourage yourself -- and save more in the process? 

The ways we think about saving
Researchers Gulden Ulkumen and Amar Cheema found that two factors tend to affect how people think about a goal: the level of abstraction (their term is construal) and the specificity of the goal. 

What are levels of goal-setting? They're the abstract portion; in other words, you can think about why you want to save (a high level), or you can think about how you want to save (low level). You can also be more or less specific about a particular goal: For example, you could decide that you want to save as much as possible (low specificity) or save $1,000 (highly specific).

The authors point out that some people naturally gravitate toward higher or lower abstraction in defining their goals. By understanding just that one aspect of how your mind works, you can adjust the specificity of your goal to keep yourself motivated and saving. 

How to make your goals achievable 
All you have to do is match the level to the specificity. Ulkumen and Cheema found that this simple adjustment made people more optimistic about how much they could save -- and more likely to actually do it. The strategy works because it aligns your goal-setting with the way your mind thinks -- instead of working against you, the idea is that is that your goals should work with you.

In other words, a high level of abstraction should be matched with a high level of specificity. So if your goal takes the form of, "I want to save money because I want to put down a deposit on my first home," you'll want to match it with a specific dollar amount. 

In this case, attaching a specific outcome to your goal can help underscore its importance in your mind. That extra dose of importance can help keep you motivated, possibly by giving you something firm to focus on. 

On the other hand, say you think about savings goals in a "how-to" kind of way. In this case, the lower level of abstraction should be matched with a lower level of specificity. Keep the numbers vague; for example, you could tell yourself that you want to save as much as possible by (for example) bringing your lunch to work and planning out your grocery shopping for the week. 

Why wouldn't you want to attach the extra importance of specificity if you're a how-to person? The researchers found that while specific translates to important, it can also translate to more difficult -- especially if you think about your goals in terms of how to achieve them. Instead of introducing the possibility of getting discouraged, focus on the positive steps you're taking to reach your goals. Over the long run, it could help you stay enthusiastic and save even more.

Whether you think in terms of whys or hows, there is a way to set goals that will work with your nature rather than against it. Take the time to figure out which method is better for you. It could set you up for more optimism, more savings, and more success over the long run.