Page 119 - Hard Goals

110 HARD Goals

crowd? They started out pretty low, saving only 3.5 percent.
But three and a half years later, their savings rate had just about
quadrupled to a whopping 13.6 percent. Parenthetically, given
its success, and the successful psychology behind it, this kind of
plan is becoming increasingly popular. A study in 2007 found
that almost 40 percent of large companies offered some kind of
future escalation plan.
So why is a plan like this so effective? Well, instead of hav-
ing a situation in which you incur huge undiscounted costs right
now and heavily discounted benefi ts at some point in the future,
this plan basically syncs up the costs and benefi ts. It pushes your
costs out into your highly discounted future where they don’t
seem that big anymore. It’s a very clever trick to play on your
brain, and the results speak for themselves.

Trick 2: Put Your Future Benefits into the Present
In Trick 1 we put some of the present costs of a goal into the
future to help us devalue our costs and thus make the benefi ts
look more attractive. Trick 2 is the converse of that, where you

bring some of the future benefits of your goal into the here-and-
now. This way your brain won’t discount the benefi ts and your
goal will look a lot more attractive right now, inspiring a sense
of urgency to get going on it.
Let’s look at another type of savings plan that offsets the
future benefi ts of saving by offering some immediate benefi t.
One group of people that tends to put a high discount on the
future (especially when it comes to money) is those in a lower
income bracket. It’s been found that a lot of these folks feel like
they’re more likely to become rich through winning the lottery
than through savings. Hence, a frightening number of people
who fall into this category don’t even have a simple checking