The psychology of saving
By Amy Brown-Bowers • Bankrate.com
Goldberg has worked with pathological savers, who
perpetually save money and restrict their spending, regardless of
the millions they may already have squirreled away. "Usually
it comes from anxiety -- they never have enough. So no matter how
much they're saving, their problem is spending. They can't spend
it," Goldberg says.
As for the major predictors of saving behaviour, Goldberg says it comes down to your view of the world.
"People who fear the world, people who view the world negatively and who anticipate the worst generally have no problem saving. If you don't have high anxiety about the future, if you're a fairly relaxed person and if you have good self-esteem, and you have good relationships, those kinds of people don't tend to save a lot," he says.
Become a saver automatically
If you aren't a saver by nature, there are some simple, painless
strategies to get you on track.
"Get a continuous savings plan," says Judy
Thomson, director of sales at BMO Retail Investments. A continuous
savings plan is basically an automatic way to channel funds from
your pay cheque or bank account directly to an investment, automatically.
Research by Harvard economics professor David Laibson shows that simplifying and automating saving plans often lead to greater savings in the long run. His research assessed the impact of things like automatic enrollment and automatic cash distributions on savings behaviour of employees and found that when it comes to savings and investment choices, people follow the path of least resistance.
Watch your savings grow
To generate some excitement about saving, play around with Bankrate.ca's savings calculator to see what $20 a month can add up to in five or 10 years.
"You say to yourself, 'What's $100? A hundred dollars isn't going to do anything.' But the simplest, smallest amounts over time with compounding interest make a huge difference," Thomson says.
"It's mind boggling when you look at it and you go, 'That's what that will grow to?' It's a really good motivator," she says.
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