You’ll be more successful reaching your financial goals if you give yourself a target range rather than a single number you want to achieve. It sounds weird, but a new study shows that we’re more motivated when we have a little wiggle room in our goal.
Let’s say, for instance, that you want to save $100 a month, or put an extra $100 a month towards paying down a credit card. Rather than committing to that $100, give yourself a range of, say, $75 to $125 a month instead. Having a range is more motivating because we perceive it as being both attainable and challenging, says Maura Scott, assistant professor of marketing at Florida State University.
There are dual psychological forces underpinning our motivation to stick with a long-term goal. The harder it is to reach a goal, the more we’ll be rewarded with a feeling of satisfaction if we succeed. But it’s also more likely that we’ll fail and give up in discouragement.
“If it’s too easy it doesn’t feel like a goal; but at the same time, it needs to work within a person’s ability,” Scott says. “The nice thing about these less specific goals is they give consumers for the best of both worlds.” she says. Even if you hit the low end, you still make your goal and you won’t feel defeated. And if you get fired up enough to hit the high end of your goal range, you’ll get a greater feeling of accomplishment.
Don’t use a range as an excuse to lowball your expectations, however. Making a goal too easy backfires. In her experiments, Scott found that achieving something that takes hardly any effort at all is as de-motivating as having a goal that’s impossibly high.
“What we found is in both of those cases it’s just not very motivating. In one case you’re not pushing yourself, and in the other, even if you’re pushing yourself, you’re not reaching it,” she says.
Failure is de-motivating, but a range gives you an aspirational target without the pressure or, if you don’t hit the high end, a deflating sense of failure. Giving yourself the option of a challenge also taps into the psychological concept of our “ideal self,” Scott says. A goal that’s realistic but a real stretch gives you “permission” to imagine how you’d like to be — debt-free, a good saver, etc. “When you focus goals to a single number, you’re kind of restricted.”
The idea of setting a high-low range works for other goals, too, such as losing weight.
Of course, this isn’t the only way we can “trick” our minds into being more financially responsible. A 2011 study out of the University of Minnesota found that just thinking about money can curb a tendency to spend, not because it gets us thinking about our bank account or debt balances, but because it reminds us of our autonomy. This feeling of independence acts as a buffer against outside influences like salespeople.
A study out of Northwestern University last year found that it’s more motivating to pay off smaller debts first, even though it makes more sense mathematically to pay down balances with higher interest rates first.
On the surface, spending and saving seems to be all about numbers, but digging a little deeper shows that this isn’t the case. The Northwestern study’s lead author David Gal calls this “the human element in this aspect of personal finance.”