A (Nearly) Foolproof Way to Hit Your Savings Goals


I’ll admit it: I hate budgets.

I know they’re important. Tracking what you spend and save (or don’t) each month, and what you want to spend and save each month, is an essential exercise if you want to improve your money habits. I’ve created at least a dozen budgets myself over the years.

Sticking to them is a different matter. At first, when expenses came up that my husband and I hadn’t predicted—one son’s class had a fundraiser; the other son got a hole in his four-week-old sneakers—we’d tell ourselves that was an exception.

But we quickly realized that, whether or not you’re married or have kids, predicting your everyday expenses is a constant challenge. And feeling like you’ve blown a budget line can be demoralizing, even if you have a good excuse.

The rigidity of budgeting is actually one reason they don’t work over the long run for most people, says Certified Financial Planner Brad Klontz, author of “Mind Over Money” and co-founder of the Financial Psychology Institute. “It’s like a diet: You have an automatic resistance to it. It’s like, let’s think about all the ways we can deprive ourselves.”

Rather than treating a budget like a diet—something restrictive you follow for a set period of time—Klontz and other financial advisors recommend looking at how to integrate good habits into your lifestyle. It’s the same reason that dietitians help clients adopt sustainable healthy eating habits: They’re more effective than trying a diet that may help you lose weight in the short term, but will be tough (and maybe even unhealthy) to stick to for the long term.

So instead of revising and re-revising our budget and making the “miscellaneous” line bigger and bigger each month, I decided it was time to try a different approach. Why not pay our bills—and ourselves—first? And stop worrying about how we spent every other penny.

First, I thought about where I wanted my money to go and why. I knew we wanted to save more for short-term expenses and long-term goals, but I got specific. I thought about the larger apartment we want to buy and the trip we want to take to Eastern Europe.

To reinforce that “why,” Klontz recommends attaching images, even names, to each account, recasting an emergency fund as the “I refuse to go into debt over a car repair” fund, say, and a savings account as a “Going to the Caribbean next winter” fund. “When you attach meaning to a goal like that, you can save dramatically more money,” he says. “You get motivated to put in more money.”

But that’s not the only trick to saving more.

My husband and I divided up the expenses. Then I figured out how much I wanted to contribute to our retirement accounts, savings and investment accounts each month—and what bills I could pay online.

And here’s the key: I set up automatic payments for all of them—from our mortgage and maintenance fees to afterschool program tuition. (Since the monthly amount varied on my phone plan, I settled for an automatic text alert to notify me when the statement was ready. And I pay the bill on my phone through a link in the text.)

I set up automatic deposits into my savings, investment and retirement accounts, too—each for a little more than I’d initially figured, just to see if I could do it. I figured I could always make adjustments later.

Once I’d set everything up, I looked at what I’d have left in a month and divided it by four. I knocked off a little to keep a cushion, and the remaining balance was my spending limit for the week to be divvied up among any number of expenses, from groceries to haircuts to a night out with my friends. If I use most of it up, no big deal—the bills are covered, and I’m still putting money toward our future. If there’s some left, I move more into my linked savings account.

It’s not a perfect system, but it’s pretty foolproof in terms of sticking to my goals. Why? It’s simple. “When you automate, it takes more energy to change that than to just stick with it,” says Klontz. (To his point: I have yet to readjust my automatic deposits.)

Bonus: Not having to worry about whether I’m saving or investing enough, or whether my bills are paid on time, means I have more time to think about other things. “One big advantage of automating is that your mind is not on a hamster wheel of day-to-day decisions,” says Jon Teran, a Certified Financial Planner with Capstone Pacific Investment Strategies in Covina, Calif. “That gives you the mental space to think about bigger goals.”

And seeing your balances grow gives you more confidence you’ll reach them. “You realize it wasn’t that hard to save, and you think, ‘Wow, look at how fast it’s growing,’” he says. “And then you can really build some momentum.”