Financial planners and personal finance advocates would likely agree that winning the “Why should I save money?” argument is one of their most difficult challenges to overcome.
Being a student of psychology and behavioral economics, I generally try to tap some sort of emotional or behavioral trigger in someone when discussing their personal finances. Once I get to know them, their “bad financial habits” slowly manifest themselves and then you can begin to address them one by one.
Some bad habits can be simple to correct, while others can be more deep seeded. Occasionally, a few can reach the point of becoming a personal ideology. The most difficult cases come from those who deal in absolutes where their minds are completely closed off to contradictory ideas.
If you have found yourself in a financial debate and lacked the proper ammunition to drive your point home, here are a few ideas to tip the argument in your favor when it comes to the dreaded topic of saving more and spending less.
20 Ways to Get Someone to Save More Money
- Feeling of Accomplishment. Try to convey how great it feels to have money in the bank without trying to gloat. By expressing a feeling a pride in yourself, you might inspire those around you to achieve the same goals when they see that someone has achieved a goal they would hope to mimic. Leading by example is one of the best known methods of leadership.
- Learned Helplessness. There are some people who believe that nothing they can do will improve their situation no matter how hard they try. A simple conversation can help them realize help is available and all they need is a to grab hold of the lifeline you are throwing them.
- Dangling a Carrot. Some people simply lack of motivation to save, and showing them a “desirable something” everywhere they look can motivate them to meet their savings goal. Advise them to put a picture of that new car in their office, their computer’s desktop background, etc. The goal is to see that new car everywhere they go as a reminder to save more and more each day.
- Shame Them. Being the butt of a joke is a place most people don’t want to be. Try being a wiseass and rattle off the shameful things they did when they needed to borrow money from you, or from someone else. Public humiliation is a very effective means of negative reinforcement for anyone who doesn’t like standing out in a crowd.
- Give Rewards. One of the most effective means of teaching anyone, especially young people, is to reward them for a good deed. If your kid saves a portion of his/her allowance, start a policy of matching what they save. If you give them $25 a week and they have $5 at the end of that week, give them another $5. They will learn that saving money has a most beneficial award — getting more money!
- Safety Nets and Emergency Funds. Everyone knows that a daredevil who continually tests fate will eventually crash and burn. So ask them why would they want to take the same irresponsible risks with their own finances.
- Quote the Bible. For those who follow a particular religion, tie in a few verses to support your argument. The Bible has a few great quotes when it comes to personal finances and goes so far to say that debt is a bad thing, and makes slaves of those who become debtors. Proverbs 22:7 states that “The rich rule over the poor, and the borrower is servant to the lender.”
- Anti-Consumer Ideology. If you know someone who hates being one of the sheep and enjoys an existence outside societal norms, use the anti-establishment (anti-consumer) rhetoric from the movie Fight Club. Tyler Durden’s infamous quote “Advertising has us chasing cars and clothes, working jobs we hate so we can buy sh*t we don’t need.” can work wonders if you push the right psychological buttons.
- Reduced Stress Levels. Sleep therapists will say one of the most common reasons we lie awake at night is caused by worrying about money, so remind them that solving their money problems today can prevent them from lying awake until 3am every night. Why do you think late night TV infomercials always include those get rich quick schemes? It’s targeted marketing for those who lie awake at night wondering how to make ends meet.
- Resentment of the Upper Class and Big Banks. The rich get richer and the poor get poorer. Right? If someone you know has disdain for the bankers of the world and refuses to increase their wealth, remind them it’s better to help themselves by saving their own money instead of taking out loans where the interest payments are pure profit for the Too Big To Fail Banks.
- Give More to Charity. If someone gives to charities on a frequent basis, the idea of increasing their annual charitable contributions can have a profound impact. These individuals likely have an effective budget in place to save money for this purpose, but offering additional expertise can increase their donations if they have more to give.
- Guilt. One of the easiest and most commonly used tactics in a verbal debate, but also one of the least effective. Making someone feel guilty occasionally works, but only if they have a sense of right and wrong. Remind them that certain aspects of their finances need addressing, but be sure to keep the guilt trips to a minimum. This can lead to resentment and have a contradictory effect in the end.
- Treehuggers and Saving The Planet. Green Living and Frugal living go hand in hand after all. Remind your favorite green living followers to save the money that came from lowering their electric bill by adding those savings directly into a savings account instead of treating it as disposable income.
- Follow the herd. A record number of Americans are saving money now that we’re neck deep in a recession. Humans are social creatures and by simply convincing them that if everyone is doing it, they might feel the pressure to do it to. This concept worked by getting everyone to spend like crazy, so perhaps the opposite can work equally as well.
- A Family’s Unknown Future. Bringing the family’s security into question can immediately trigger an intrinsic protection mechanism. If you mention that they need to save for a rainy day in case little Timmy falls off his bike or won’t have enough money to go to college, that could be just enough to start building an emergency fund.
- Time to Grow Up. Remind parents that the worst types of savers are the adult children who still rely on mommy and daddy for a financial lifeline. Bailing them out once might be acceptable for an unforeseen expense, but repeated irresponsibility followed by additional bailouts only reinforces bad behavior.
- Challenge a Competitive Spirit. Start a “Biggest Saver” competition where the winner will have the highest percentage of savings based on the percentage of each competitor’s annual salary.
- Recalling Past Financial Mishaps. I’m a big believer in allowing people to make their own mistakes so they can learn from them. If you know of an instance where poor financial decisions were made, remind them what happened and the subsequent consequences. If this happened more than once, remind them they have a pattern of financial irresponsibility and it’s easier to prevent a disaster than deal with the after effects.
- Addiction and Lifestyle Changes. Some of the most notorious examples of non-savers are those that repeatedly spend too much because of their lifestyle. Whether they’re smoking a pack of cigarettes everyday, have an addiction to shoes, or constantly living paycheck to paycheck, their behavior should be brought to attention just in case they aren’t aware of how costly it can be over a prolonged period of time. Changing those behaviors and addressing the addictions can add up to huge savings very quickly.
- Promote Your Own Success. If you let others know that you’ve had success following a particular savings plan, let them know about it. Sure, some might suggest you’re bragging, but most people tend to follow a plan that is known to work and will want to have similar success. Imitation is the most sincere form of flattery!
If you have another way to convince someone to save more of their income, please share them in the comments section below.
Photo by LuMaxArt