Make Saving a Habit: Like Washing Your Hands After #2...

Why do people habitually do certain things? I stumbled upon a great article on consumer habits (or lack thereof when it comes to saving and financial planning) that I wanted to share with my readers. The simple reality is that we need to not only make saving (I also call it "paying yourself first") not only a habit, but a top priority. With pensions receding at a rapid clip and continued US government deficits (don't count on Social Security to take care of you younger folks), it is more important than ever to save and save now. It doesn't take much if you do it everyday and don't think about it (e.g. make it a habit). Dropping a couple of bucks in your savings kitty everyday is all it takes.

Buy This: Save More, Spend Less
By ROBERT POWELL
MarketWatch
August 14, 2008 4:31 p.m.

Many American companies are adept at getting people to start habits. Firms such as Procter & Gamble, Colgate-Palmolive and Unilever "have perfected the art of creating automatic behaviors," said Charles Duhigg of the New York Times. They get consumers to chew gum, spray perfumed water on their furniture, and whiten their teeth "almost without thinking, often in response to a carefully designed set of daily cues."

By contrast, companies in the financial-services sector -- specifically banks, insurers, mutual fund firms and the like -- have failed to create the cues to get Americans to develop the saving habit or break the spending habit. So the question arises: What lessons, if any, can financial firms learn from those firms so skilled at manufacturing habits? What are the cues needed to create the savings habit?

READ THE REST OF THIS EXCELLENT ARTICLE HERE...