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The Psychology of Saving

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When it comes to saving, some people convince themselves that they are giving up money and therefore don’t want to put it away for their future. It’s almost a selfish instinct that doesn’t want the “future you” to be happy with money that could make the “present you” happy today. This often creates a psychological roadblock to financial freedom.

A study conducted by the University of Minnesota asked people to consider how much they would need in retirement in order to live comfortably. When asked if they could live off of 80% of their current income, more than 75% said yes. But when asked if they could set aside 20% of their income for retirement, more than 80% said no. You can definitely avoid this trap. Begin to envision what you want your life to be like when you retire, and it will be easier to convince yourself that it’s worth saving for your future.

Posted: 3/23/23