I was thrilled to read Katie Karlson's DailyWorth piece today about jump-starting her savings account using her tax refund. For those of you who struggle to put money aside out of your paycheck, a tax refund, birthday gift, or other such windfall can be just the ticket to help turn you into a super saver.
Successful saving is a habit, and all good habits need a reward if they're to continue. The huge rush that we get from seeing a four-digit increase in our savings balance can trigger a desire to do more. In Katie's case, she doubled her monthly auto-transfer to meet her savings goal even faster.
The other smart thing Katie did was to have a specific savings goal. She's moving this summer, and wants to make sure she's financially prepared.
In order to reinforce her new saving behavior, I would recommend that Katie keep close tabs on exactly how each dollar saved contributes to her progress. For example, if she knows that renting a U-Haul truck will be $1,000 and she needs $2,000 to cover deposits and fees on her new apartment, she should regularly look at her account balance and say to herself,"I've got the truck covered now and I'm almost halfway there on fees and deposits. In x weeks I'll have enough saved to cover all of those costs, and if I really work hard and save an extra $75 in the month before I move, then I can afford to buy some pizzas and wine for my friends to bribe them into helping me unpack!"
Katie, here is what you're doing right:
- You have your goal in place even before you've figured out all the details of how to make it happen (the order goes values -> goals -> tactics);
- Your goal is specific, positive, and actionable;
- You maximized your dollars AND reinforced a good financial habit all in one fell swoop;
- You protected yourself from going into debt due to a foreseeable event;
- You paid it forward and helped improve your own positive support network by inspiring your co-worker to save more, too.
Way to go, Katie!