Personal Saving

First, many people buy products spontaneously without planning to buy them in advance. That is, they buy a product or service, and decide to buy it, only immediately before they make the actual purchase. Most of us fall prey to unplanned spending every now and then. Retailers put a lot of effort to encourage unplanned spending. Take for example the sweets at the checkout of the supermarket, or the sales table in the middle of the toy store. Temptations like these make it much harder to control spending. Of course, these are many more examples how retailers can motivate people to make unplanned purchases. Luckily, there are many ways to limit these kinds of expenditures. You can, for example, make a shopping list before going to shop, hold less money in your pockets to decrease the tendency to buy food items on your way home, or leave your credit card at home when visiting the shopping mall. Besides, never go shopping when you are hungry. It makes you vulnerable to buying unplanned food items and overfilling your cart.

Second, people tend to think it is more difficult for them to save money now (and spend less) than it will be in the future. For example, they want to go out of dinner this evening, they want to buy their partner a sweet gift, or they are planning to do something nice in the weekend. Obviously, in the short term people are aware and think of many things they want to spend money on. When they think about the future, they don’t know yet what they will be doing by then. As such, they are less aware of the temptations they will be facing in the future that might prevent them from saving more. Hence, they think it will be easier to save in the future. The point is, however, that they will also think this in a few months from now. Consequently, people tend to postpone saving more all the time. One way to avoid postponement is by committing yourself now to increase your savings rate at a certain point in the future. For example, you may want to consider arranging that a greater percentage of your monthly salary is automatically transferred to your savings account from a certain point in the future.