Check out these four tricks used to get you to spend more (without you knowing it).
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Motivation is what gets you started. Habit is what keeps you going.
—Jim Ryun, Olympic medalist and former U.S. Representative
For the first two months of the 2014 Investing Challenge, we’ve focused on motivating you to start investing $300 a month more for retirement.
We started by showing you how much of an impact that $300 a month could make on your nest egg—as much as $435,000 if you keep up the Investing Challenge for five years and then leave your money invested for 30 years.
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Then we invited you to tell us how you would come up with an extra $300 a month, and you were full of ideas. From exploring free entertainment options to negotiating lower rates on everyday bills to giving up luxuries, you’ve been willing to put it all on the table in order to invest more!
But now we’ve reached a critical point in the Investing Challenge. Studies show that only about half the people who set a long-term goal actually stick with it after 90 days. The Investing Challenge 90-day mark is coming up soon. If you can stick with it just a little longer, it will become a habit. And as Jim Ryun pointed out above, “Habit is what keeps you going.”
Our Number-One, Habit-Forming Tip
When it comes to building money habits, the single-most practical tip we can give you is to make your investing automatic. Many of you told us you are already taking this advice to heart and making it work for you.
“[I’ll] just take it out of my paycheck so I never see it.”
“We got a 1% pay raise and slight cost-of-living increase starting this month, so I just let that go into retirement savings. I won’t miss it if I never see it.’
“We’ve made it an automatic deduction so we can’t forget/cheat.”
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That’s the reason automatic withdrawals work. When the money comes out of your paycheck before it goes into your bank account, it’s out-of-sight, out-of-mind. As another member of the Investing Challenge community said, “You just get used to it.”
One More Thing—Or Maybe Two or Three
While putting your investing contributions on autopilot is the best way to make the Investing Challenge a habit, it may not work for everyone. Here are a few more things you can do to help you reach your investing goal this year:
- Write it down. Psychologists say you are 10 times more likely to achieve a clear, specific goal. It’s hard to be more specific than our challenge of investing $300 more a month for retirement. Give your goal even more power by writing it down. Then keep it handy so you can refer to it when you begin to doubt your decision.
- Create your own baby steps. If the thought of parting with an additional $300 a month is overwhelming to you, try breaking this big goal into several smaller goals. For instance, you could start by investing an additional $100 this month, and increase that by $50 each month until you reach your $300-a-month goal.
- Be accountable. Find a friend you can trust to help you stay the course in your weak moments. That person can be a spouse, a fellow investor or an investing advisor. Whomever you choose, make sure they understand your goal and why it’s important to you to reach it.
Now It’s Your Turn
Help your fellow Investing Challenge community members stay on track, and tell us about your Investing Challenge wins! Did you decide to take on the challenge even though you doubted you could afford it? Are you feeling more confident about retirement now that you’ve taken some positive steps toward meeting your goals? No matter how big or small, email your success your stories to us at InvestingChallenge@DaveRamsey.com.
If You Have Questions…
It’s never a good idea to invest just because someone—even if it’s Dave—told you to. To be successful at retirement investing, you need to know how it works and why it’s important for your future. An investing advisor with the heart of a teacher can answer all your questions and help you make the most of your retirement savings!