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To save more money, find your why.

Have you ever said to yourself “I’m going to buckle down and start saving money?” Gotten "really serious" - wrote out a budget - maybe even downloaded the Mint app.

And then almost immediately went back to spending recklessly and wondering where everything went at the end of the month?

A lot of us have.

Saving without a goal is ineffective. Our brain needs a reason (a compelling one) to give up short-term or instant gratification (buying new Louboutins today) in exchange for a longer-term reward (a trip to Greece at the end of the year) or an even more distant goal (retiring in 50 years).

I started out my career saving the standard 10% for retirement, but I didn't get stronger at saver beyond that, until I set a financial independence goal.

I had to plan and visualize: “In 10 years, I want to retire from my corporate career and travel around the world, only working if and when I want to, on projects that excite me, while being able to maintain a high-standard of living, including high-investment parenting.”

From there, I had to determine how much money that required, and work backwards to map that to a monthly savings goal. I did this while simultaneously working on strategically increasing my income.

Now, those systems are largely on auto-pilot. I use sub-accounts in my brokerage to save for smaller goals like:

  • Back-packing Southeast Asia in early 2018
  • Traveling Europe for 6 months in Spring / Summer 2019
  • Maintaining an education fund (I’ve shared that I invest a solid five-figures annually on different learning opportunities) 

My brokerage makes this super easy, by allowing me to hold one account and direct deposits into different accounts that have different asset allocations and timeline for use.

The point is, goal-based investing, or saving with the end in the mind, is the key to sustainability in your savings plan. Robo-advisors like Betterment even use this type of behavioral science to design their software. When your money has a clear target (e.g. a honeymoon in the Philippines or the wedding of your dreams) instead of a vague one (saving…because I should???), you’re much more likely to stick to the plan.

What are some of your big savings goal? Pick one. Then, create a sub-account in your brokerage or savings accounts to help you map to that goal. Today.

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