'When I get a raise, I'll start saving' and other mental traps that keep you from saving money


Chris Browning, founder of the podcast Popcorn Finance, worked an hourly job selling tools during his college years. During this time, he saved no money. He reasoned that because he was making only between $7 and $10 per hour, it didn't make sense to save. When he got a "real" job, he told himself, then he would start tucking away some money.

But that didn't happen.

"When I finally got my first full-time position, I felt that I deserved to enjoy my new salary a little," Browning says. And even on his new salary, the expert-recommended guideline of putting aside 10% to 15% for retirement "was way more than I had ever considered saving before," he says. "I hadn't built up the habit of saving when I wasn't making much, so it felt crazy to start with such a high number now."

Browning has since strengthened his savings habit. But his train of thought is an example of a common pitfall called a "when-then" trap — the idea being that you put off pursuing a goal until a time you think you'll be more prepared to tackle it. It can end up meaning you put off your goal indefinitely.

"When I get a raise, I'll start saving" is a common financial when-then trap, as are promises that your future self will focus on paying down debt or investing for retirement. They can also involve career, health, and other life goals.

When-then traps are easy to fall into and can keep you from reaching important financial benchmarks. Here's what you need to know to overcome them.

When-then traps can affect everyone, regardless of income

One of the reasons people put off saving money is that they don't feel their job is "good enough," according to a 2019 Bankrate study. The mindset that your future self will be in a better position to save money can deter you from making smart financial decisions now. It also isn't proven to be an effective long-term plan.

A phenomenon called the "hedonic treadmill" comes into play, says Grant Donnelly, an assistant professor of marketing and logistics at Ohio State University. This refers to the tendency of a person's happiness to always return to its baseline level, regardless of good or bad fortune.

I hadn't built up the habit of saving when I wasn't making much, so it felt crazy to start with such a high number now.
Chris Browning
Founder of Popcorn Finance

If your default mindset is that you feel you don't have enough money, that mindset can persist even after you get a raise, or even if you strike it rich. In a 2018 study, Donnelley found this to be true even for the wealthy: Those making between $1 million and $5 million say they will be happier if they make 2 to 3 times more money.

Another reason getting a raise might not encourage you to start saving is lifestyle creep. When you have more money, it's tempting to adjust your lifestyle accordingly and spend more. "It's a story around who your social references are," Donnelly says.

In the end, waiting for potential raise, he says, is not an effective plan if you want to save.

How to overcome a when-then mental trap

It wasn't until Browning found himself in $27,000 worth of credit card debt that he started saving. By cutting back his spending, he was able to pay off his debt in two and half years. For him, the key to getting started was to remember that "every dollar counts."

"During my debt payoff journey, I saw how impactful even a small payment was and how much less I could live on than I thought," he says. "I carried this attitude over to my post-debt life and began to save more than I ever had in the years prior."

How cognitive bias affects your investments

Video by Courtney Stith

Signing up for automatic contributions, and signing up to have your contributions automatically increase, can help you commit to any when-then promises you make. When you get that annual pay bump, you know you'll follow through with putting more toward your financial goals.

But the best way to overcome a when-then mental trap is to value the small contributions you can make right now, Donnelly says. Those can have a big financial impact. For example, even putting an extra $25 a month toward your debt can help you pay off your debts faster and save money on interest. Or if you invest just $1 per day for your child, you could have $13,000 by the time he or she turns 18.

"Instead of saying, 'I'm gonna save $20 once a week when I get a raise,' say, 'Well, maybe I can still save $5 a week now,'" he says. "Understand that a smaller contribution would still matter."

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