Done To Zen

Can I Get Rich on a Salary talks about an article in the September 15 issue of BusinessWeek that suggests that short-term thinking may be a lot more effective than long-term thinking when it comes to your savings.

In one of their experiments, people were asked how much they would save the following month and reported (on average) $287. This in mind, they then went on to save (on average) $440 that following month.

But when asked to plan ahead four months, people said they would save (on average) $946 over that time. And they then went on to save (on average) a grand total of only $123—which translates to $30.75 per month. If I’ve read the experiment description in the article correctly, people concentrating a one-month savings goal did more than 14 times better than those concentrating on a four-month savings goal.

I was initially shocked with the results, but then after a moment of thought, I realized that the results weren’t actually that surprising.

I always knew that I sucked at making “long-term” goals. I am really good at meeting my savings goals per month, but I’m terrible at meeting my “long-term” goals. That is to say, whenever I sit down to write down my long-term goals, I am always too optimistic, counting on (hoping for?) thousands of dollars in freelancing income and interest.

Can I Get Rich on a Salary suggests the following steps:

1. Set a long-term savings goal.
2. Break up the long-term savings goal into smaller savings goals (such as monthly goals).
3. Look at the savings goal for the upcoming month and make that your focus.
4. Consider specific, concrete steps to achieve the savings goal for the upcoming month.
5. When you consider your daily spending or saving decisions, think about them in terms of the savings goal for the upcoming month.