While making a New Year’s resolution to save more money this year is an excellent step to build your savings account, it may not be enough to achieve financial freedom. According to financial experts, you need to put it into action and actually save money to accomplish your financial goal. How can we make saving a reality this 2019? Here’s what the experts have to say.
According to the Chazen Institute‘s latest study, the researchers found more people are likely to fulfill their savings goals if they get support from their friends or families. The researchers studied entrepreneurs who borrow money from microcredit banks in Chile regularly.
Since most of these entrepreneurs are self-employed, even automating their savings deductions do not always work since their income isn’t consistent. Worse, sometimes they don’t generate revenue at all – which makes it more difficult for them to save money. The experts laid out these three proven strategies to help entrepreneurs achieve their financial goals.
Join a Support Group
If there’s a support group for those who go to the gym or want to diet, the experts say you can also find a support group for those who want to save. According to the researchers, they divided the participants into two groups. They offer a savings account on one set of participants with 0.3-0.5% interest rates if they start saving money.
Meanwhile, they offer a support program to another group that includes public goal setting, non-financial rewards, as well as monitoring their spending habits. The researchers noticed how the latter group grew their savings deposit 3.7 times compared to the first set of participants. Their average savings also doubled.
According to Columbia Business School‘s business professor Stephan Meier, most entrepreneurs are motivated to save. However, they find it difficult to implement their goals as they need to be accountable for it. Meier says having a support group gives their needed extra push to turn their goals into reality. He adds just by talking and sharing your goals, or financial hurdles helps a lot.
He reminds everyone though to choose the right support group that works for you best. He suggests connecting with people with the same circumstances as yours. For example, if you have a wealthy entrepreneur in your group where he earns thousands of dollars every month, saving might become more discouraging than beneficial to you who make less.
Meier’s team also conducted a follow-up study to determine if automating reminders (like sending a text message to remind the participants to save) could help them commit to their savings goals. Aside from sending the text to the intended recipients, your immediate family or closest friends also receive a reminder if you didn’t meet your goals.
The researchers found automating these reminders at least once or twice a day is an effective way to keep track of your savings goals.
Meier says receiving a reminder helps the entrepreneurs reassess their goals, making it easier for them to stick to their financial plans. He also noticed when they stopped sending those messages, the participants’ savings also went down.
Setting the Right Number
Meier encourages entrepreneurs to start looking for a support group to begin your journey towards financial freedom. It’s also recommended you decide how much you want to save every month (e.g., $100) and start committing to it.
Aside from that, Meier reminds everyone to limit your automatic reminders for the day. According to him, getting 500 reminders every day isn’t efficient. If anything, it only discourages you from saving since you’ll get annoyed by the constant messages. Meier recommends setting a reminder of up to three texts or email notifications per day for optimum results.