Tip #4: Involve your friends in your savings challenge
November 04th, 2008 - 49 Comments
This is tip #4 of the Save $1,000 in 30 Days Challenge.
Today’s tip is to involve your friends and family in your money saving. Without this, you’ll have a tough time achieving your goals. For more people, the reason they fail to save money is not a lack of money-saving ideas — it’s themselves and their lack of discipline. By involving your friends, you eliminate that lack of discipline and give yourself automatic accountability and a built-in reason to win.
Let’s take a look at this question, which came in from my post about turning the thermostat down:
Anybody have any tips on how to do this with room mates if you and your room mates do not have the same goals? How do you talk them into wanting to put the thermostat down 3 degrees if it is going to possibly make them uncomfortable, or maybe they just do not want to substitute comfort for any dollar amount?
Great question — and it doesn’t just apply to saving money by turning your thermostat down. What about if you want to eat out less this month? Or go out less? How do you enlist the help of your friends?
Why your friends matter
Getting your friends involved is important because your spending is based on your context. A lot of us like to think that we make our financial decisions individually. What an American, determinist perspective! But it’s not true. Our spending depends on those around us. For example, if you make $50,000/year, you probably hang out with others who make similar amounts and have similar spending patterns. If your friends shop a lot, and you’ve been accepted into that group of friends, chances are you shop too. Social influence is extremely powerful
Think about it: When was the last time you spent money because of friends? For me, it was this weekend, when I ate out. It was fun, it was social — but it was also financial.
As you’ve been seeing from my tips over the last few days, the actual financial decisions are only a small part of your spending. A lot of it has to do with the psychology of spending. That’s why enlisting the help of your friends to achieve your goals this month is so important.
I want to point you to an astonishing study that highlights the importance of your social network. In this case, it was for obesity:
Obesity can spread from person to person, much like a virus, researchers are reporting today. When a person gains weight, close friends tend to gain weight, too.
The answer, the researchers report, was that people were most likely to become obese when a friend became obese. That increased a person’s chances of becoming obese by 57 percent.
“You change your idea of what is an acceptable body type by looking at the people around you,” Dr. Christakis said.
Fascinating. I can’t speak authoritatively to the correlation between obesity and finance, but I’ve seen lots and lots of patterns between the two (e.g., here and here). I think that intuitively, we all recognize that a lot of our spending is a result of our friends and the people in our social network. You think your spending would stay the same if you hung around a bunch of immigrants, or people who make $400,000/year? Not a chance.
How to enlist your friends’ help to save money
We’ve already talked about why it’s important to enlist your friends’ help to save money. Without their help, you’ll still have the constant pressure to go out, buy new stuff, spend, or whatever your current spending patterns are. In other words, it will be you against the world. To help change that, there are two approaches you can take:
1. Enlist your friends to join the Challenge (cooperative approach)
2. Bet your friends you can hit your goals (adversarial approach)
Enlist your friends to join the Challenge.
For the person above who wanted to know how to get his roommates to be cool with turning the thermostat down, this is the approach I would take.
I read this personal-finance blog iwillteachyoutoberich.com and he just announced a Save $1,000 in 30 Days Challenge. I don’t know about you guys, but I’m down to save $1,000. (Realistically, I think I can save $700 this month.)
Would you guys be interested in joining in?
If we can each participate, it would be a lot easier (e.g., we save on heat a little, clean the house ourselves, cook a little, and that saves hundreds right there). I took his first 3 days of tips and I’m already saving [$XXX].
What do you think?
Check out the 30 day challenge here:
The chief benefits of this is that you get (1) social support and (2) economies of scale. If you’re all saving towards a common goal, you can eat rice and beans, and you’ll also be more likely to turn down the heat, not go out as much, etc. Personally, I’m doing this approach.
Bet your friends you can hit your goals
You guys know I love bets. Sites like Stickk.com are great because they give you an easy way to motivate yourself by publicly committing to a goal. There are thousands of psychology studies about commitment — specifically, public commitment — which is highly persuasive. If you tell a group of people that you’re going to stop smoking, or lose weight, or save money, you’re highly motivated to save face and hit that goal.
I used this strategy successfully last year when I ran a weight challenge to gain weight. I’ve always been a slim guy so I decided to bulk up a little. I emailed my friends and got them involved: I bet that I would GAIN the weight, while I encouraged them to bet against me. I describe all the details in How I Gained 5 Pounds in One Week (check it out), but here’s the initial email I used to get my friends involved:
The text I’d use for the Challenge is something like:
I read this personal-finance blog iwillteachyoutoberich.com and he just announced a Save $1,000 in 30 Days Challenge. I’m taking the Challenge and trying to save $700 this month.
Now, who wants to bet me I can’t do it?
You can try anything you want — inviting me out to free meals, sending me sales, asking if I want to grab a drink. Whatever it is — do it. But you have to bet me $25, $50, or $75 that I won’t be able to hit my goal of saving $700 this month.
In other words: I bet you that I can save $700. You bet $25, $50, or $75 that I CANNOT save that much money. I’ll provide weekly updates so you can track my spending.
Let me know if you’re in by this Friday, November 7th.
The key is to get your friends involved, whether they join the Challenge or bet against you. Get your co-workers involved, too: At PBwiki, we’ve done a hot-sauce-eating contest and a Biggest Weight Loser challenge.
The result of getting your friends involved
For my weight-gain challenge, once I bet my friends, I actually started caring less about my weight-gain bet itself, and more about showing my friends that I could do it. Whenever I felt like I couldn’t do it (not ANOTHER glass of milk), I knew I had to or I would lose to my friends — and that wasn’t gonna happen. Finally, by having weekly check-ins, I knew I had to hold myself accountable each Sunday.
The same is true of saving money. For the challenge, my friends know I’m running this challenge, which means they’re open to hanging out at free places instead of expensive bars/restaurants this month. Plus, there’s the motivation aspect: If you set a goal of saving $300, or $500, or $1,000 this month, and you bet your friends publicly, you are GOING to find a way to make it happen. Don’t do this alone. Get others to help you and you’ll be even more successful. Start by leaving a public comment with your goal and name today.
Total savings: $100-$500
Last thing to do
1. Leave a comment on this post describing your name and what your goal is this month. Use this to hold yourself accountable. Each day, I’ll ask you to post how much you’ve saved cumulatively. Use this as a way to track your own progress (it will also encourage others to join)
2. Want to submit your own savings tip? Submit a money tip here.
If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.
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