Monday 29 January 2018
If you’ve tried the 52 week challenge, the 50/20/30 rule and saving every $5 note you come across, here’s the next savings strategy to take for a whirl: temptation bundling.
This simple technique is tried and tested to help people meet their goals, for example, getting fit. So, what’s it all about, and how is it going to help you plump up your rainy day fund?
Temptation bundling is a self-control strategy put forward by Katherine Milkman an associate professor of operations, information, and decisions at the University of Pennsylvania’s Wharton School. So it’s backed up by real science. Here’s how temptation bundling is explained in her Princeton Alumni profile:
“The idea is to link a want (in the study, listening to audio versions of page-turners such as the Hunger Games books) with a popular should (working out at the campus fitness center). If getting on a treadmill were the only way to hear the next chapter in the novel, would you be more likely to get off the couch and go to the gym?”
Basically, the rule is you can only do something you enjoy while combining it with something you don’t enjoy so much, but really should do.
With a little bit of tweaking, you can apply the practice of temptation bundling to your savings as well. Basically, all you need to do is make a deal with yourself that when you do a fun thing – like going out with friends, sneaking an afternoon chocky or treating yourself to a new outfit – you’ll commit to also making progress on your savings goals.
Here’s a few examples of how it might work to get you started.
One of life’s little pleasures is enjoying a well-cooked meal when you know someone else has to do the dishes. Use your guilty pleasure of eating out to remind you to save, by committing to also transferring the total of the bill into your savings account when you go to pay. Your rainy day fund will be looking nice and plump before you know it.
To step it up a notch, you can promise to only eat out when you save the cost of the meal, plus 10%.
If you’re a shopaholic, turn that expensive habit around to help you keep up on your saving goals. You can make this one similar to eating out, where you only let yourself hit the checkout if you’re committed to dropping the total of your bill into your savings account as well.
Or if you’re more of a window shopper and spend more time than money while you’re out, you can “charge” yourself a fee for every shop you enter – say $5 into your savings account before you go inside every store.
This one’s great if you’re trying to work your way towards a particular savings goal. Say you’re saving up $1,000 for a new laptop and also re-reading your favourite book, Harry Potter and the Chamber of Secrets. There are 18 chapters, so before you let yourself read each new chapter, you must put away $56. You can’t carry on reading until you’ve transferred the money into your savings stash. By the time you’ve finished reading you’ll also have hit your savings goal.
Otherwise, if you’re a voracious reader, set yourself this challenge: before you can read the next chapter in any book, you must put $2 in your savings account.
So there you have it – simple right? You can set your own temptation bundling challenge that caters to your “wants” and helps you build up a fat savings balance at the same time. Let us know below what strategy works for you!