Percapita

Which of these goals seems more realistic: saving $5 a day or saving $150 a month?

If you said $5 a day, you aren’t alone. Some would agree, saving $5 per day seems easier—but both goals actually result in the same amount of savings by the end of the month.

By reframing big goals into smaller, more achievable ones, you might feel more inclined to meet them.

Behavioral economist, Shlomo Benartzi, used a simple study to show how framing can impact people’s choices about whether or not to save¹.

In Benartzi’s experiment, different groups of people were challenged to either save $5 per day or $150 per month. The people who were asked to save just $5 per day accepted the savings challenge 30% of the time.

But in the group that was asked to save $150 per month, only 7% of participants accepted the challenge¹.

Fewer people were willing to try to save money when the end result seemed unattainable.

If you’re feeling like you aren’t able to meet your savings goals, make them smaller. It might be easier to sacrifice your daily snack run than it does to come up with a big chunk of cash. So, lean into that, and stash cash at intervals that feel achievable.

Small accomplishments build up, and eventually, lead to big results.

Ready to start saving your way?

1 Benartzi, Shlomo, and Roger Lewin. Save More Tomorrow: Practical Behavioral Science      Solutions to Improve 401(k) Plans. Penguin, 2012.

*Percapita Group, Inc. is a digital company that provides access to products and services to improve financial wellness. Percapita is not a bank. Percapita deposit accounts are provided by Sutton Bank, Member FDIC. The funds in your deposit accounts are eligible for FDIC insurance up to $250,000 on a pass-through basis. The availability of FDIC insurance is contingent upon Percapita maintaining accurate records and determinations of the FDIC as receiver at the time of a receivership if Sutton Bank should fail. Such coverage is subject to aggregation of all of your deposits held at Sutton Bank. For further information about deposit insurance generally, you may write to the FDIC at 550 17th Street, N.W., Washington D.C. 20429, telephone the FDIC’s toll-free hotline at 877-275-3342, or visit its website at www.fdic.gov.