Trick your brain to save a down payment

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Online shopping makes spending an ever-present option. If you want to buy those new boots, try matching that spending with an equal contribution to your down payment.

Why do we have such difficulty sticking to a long-term savings plan when we consider our future goals just as important as—if not more than—present goals? We generally like to think that humans are highly rational creatures, but the fact of the matter is: most of our decisions are determined by years of neural conditioning, rationality being only a small piece of the puzzle.

The rational side of the brain that communicates the need to save now for a future benefit is often drowned out by the emotional side of our brain. Swiping a card for a new laptop instead of saving that money for our down payment feels natural because the rational brain we assume is acting in our favor is also justifying a financial decision that doesn't align with our long-term strategy.

So with our brain working to persuade us it's OK to spend when we should be saving, how can we outsmart our own (very persuasive) selves in order to save?

Make it hard to spend

It's time to make it really tough to access your savings account for impulse buys. For example, instead of keeping your savings in your easy-to-access checking account, keep these savings in a separate account or a brick-and-mortar. When we're tasked with an inconvenient action to get a reward, we're less likely to complete the initial process.

Automate your savings

One way to avoid the pain point of saving is to allow automation to take the task out of your hands (and out of your mind). Automating your savings is an incredibly easy way to divert your cash toward a goal without much thought on your end.

Because it removes the rationalization whether to save or not, it also removes the emotional act of negotiating with your own mind.

Create specific goals and set reminders

Studies suggest that we tend to overlook our long-term goals in favor of immediate gain. To stay in tune with your long-term goals, set and showcase reminders that force you to acknowledge your long-term goal regularly. Some people connect with visuals (like posting a picture of a dream home in a highly visible area), others connect more with the numbers side of saving (like creating a clear savings timeline with specific, number-based savings goals). Depending on your personal approach, use these reminders to keep you on track.

Match impulse buys with an equal amount into your savings

Even if we're not in a retail environment, our computers and our phones make spending an ever-present option. Inundated by these opportunities to spend, skew the act of spending to your favor. So you want to buy those new boots? Match that spending with an equal contribution to your down payment.

Sometimes the pain of doubling a cost is enough to deter a purchase. In the case you still choose to spend, the matched contribution ensures you're at the very least taking measures to save.

Put away any unexpected savings

Consumers often excuse an unbudgeted expense with "But it was on sale!" To piggyback a good habit onto any impulse purchase, take the sum that was discounted and add it to your down payment savings account.

Use herd mentality to your advantage

While we're most familiar with financial pressure in the form of "keeping up with the Joneses," social pressure can also be used to our advantage. When social expectations are incorporated into a task, we're more likely to feel compelled to complete it or to showcase our progress toward it.

This herd mentality can be applied to both positive and negative habits. If you're comfortable chatting money with friends or family, use accountability from your acquaintances to encourage your saving habits. Changing your social environment to support saving strategies over spending habits provides the social pressure to choose saving over spending.

Maintain your spending status quo—even if your earnings increase

Lifestyle inflation is real and often tough to reverse once implemented. Maintaining the status quo for your spending will maintain a spending expectation. Instead of considering a financial windfall "extra," consider it another piece of paper to add to the down payment pile.

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This article was written by Claire Murdough from The Motley Fool and was licensed as an article reprint from January 25, 2015. Article copyright 2015 by The Motley Fool.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
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