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Does Social Saving Really Work?

Does Social Saving Really Work?

    There’s a Web 2.0, socially networked version of just about everything these days — including saving money for your goals. Sites like SmartyPig allow users to announce their financial goals to the world, network with other savers, talk about saving money on their other social networks and ask for help from friends and family. But does the social experience really help people save more money than they might otherwise?

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    Just the fact that several websites have put social networking together with saving isn’t enough to automatically say it’s a good idea. There are plenty of positives and negatives to the idea, so far, making it a surprisingly hard call.

    Who Should Really Know What’s In Your Bank Account?

    While I can name quite a few reasons to be leery of the social networking / saving combination, there is one in particular worth worrying about: who should know how much money you have — and what you plan to do with it? There are plenty of people who I don’t want to know what the contents of my wallet are, let alone what I have in my savings account. It goes far beyond the guy who always wants to mooch lunch off of me, too. I wouldn’t want an employer to get a good look at my savings goals: what if I’m planning for a long vacation that I haven’t told my boss that I plan to take? Or what if I’m saving for a goal that my employer doesn’t approve of? Think of how much damage a few photos on Facebook can do and then expand it to your financial decisions! I’m less concerned, admittedly, about the approach that websites like Wesabe take — allowing you to discuss your finances in forums and make the decision on how much information to share fore yourself.

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    On top of those privacy concerns, many personal finance sites worry me because of the potential for identity theft. Even if you’re only giving out your bank account numbers to websites you trust, every site that gets it — money management, social saving, etc. — is just a bigger chance that something will go wrong and someone will get access to your financial identity. Sure, it sounds a little paranoid, but sites like Mint have a long list of security measures in place because they need them. While having to give out your bank account number to make use of a service shouldn’t necessarily be a deal breaker, it should certainly give you pause.

    Does Support Really Make A Difference?

    The idea behind social saving is that the more support you get in working towards your goals (especially in saving money) the more successful you can be. In general, that’s a good argument: I know that I’m more likely to complete a goal if someone will hold me accountable for it. In terms of goal-setting, accountability does not need to be formal — just the fact that someone knows about my goal and will think poorly about me if I don’t complete it is enough to encourage me. It’s a relatively simple hack that can really increase your ability to move forward on your goals. That holds true for monetary goals just as much as any other ambition.

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    SmartyPig, in particular, makes the most of this incentive. It goes beyond informing friends and family about your goals. Instead, the site helps to engage them in the savings process — to the point of offering ways to ask your friends and family to donate to your cause. No matter the reason you might like that level of engagement on your own, it does seem likely to help savers significantly. Of course, just making mention of your goals in a conversation with a friend or a family member may be enough to provide the same benefit.

    Does Social Saving Really Help?

    Overall, it’s easy to conclude that social savings sites can be useful tools to create a support structure for yourself as you work toward a financial goal. It is less clear, however, whether the benefits that sites like SmartyPig offer outweigh the drawbacks to using them. It seems that, to a lesser extent, it’s possible to get the same effects without putting so much information about yourself out on the internet. But I don’t think that you can get the full effect with just a conversation or two with a friend. In some cases, it’s arguable that those benefits are worth putting all sorts of information about yourself online and allowing anyone to look at it.

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    The fact that some of these sites, including SmartyPig, can be very beneficial to our savings makes it harder to say no to them. In most cases, I would suggest that someone considering turning down 3.9 percent interest on their savings accounts — the rate that SmartyPig offers for money saved through its website — is out of their minds. Considering that many banks are dropping the interest rates they’ll pay on savings accounts, it’s almost a question of how much you’re willing to sell your information for. Either way, that interest rate can really boost your ability to save. There are plenty of sites that have made social lending an option — possibly a lucrative one — as well.

    Which direction do you lean on this one? So far, I’m reluctant to put my savings goals up for everyone to see, but I’d like to hear your decisions.

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    Last Updated on July 8, 2020

    3 Techniques for Setting Priorities Effectively

    3 Techniques for Setting Priorities Effectively

    It is easy, in the onrush of life, to become a reactor – to respond to everything that comes up, the moment it comes up, and give it your undivided attention until the next thing comes up.

    This is, of course, a recipe for madness. The feeling of loss of control over what you do and when is enough to drive you over the edge, and if that doesn’t get you, the wreckage of unfinished projects you leave in your wake will surely catch up with you.

    Having an inbox and processing it in a systematic way can help you gain back some of that control. But once you’ve processed out your inbox and listed all the tasks you need to get cracking on, you still have to figure out what to do the very next instant. On which of those tasks will your time best be spent, and which ones can wait?

    When we don’t set priorities, we tend to follow the path of least resistance. (And following the path of least resistance, as the late, great Utah Phillips reminded us, is what makes the river crooked!) That is, we’ll pick and sort through the things we need to do and work on the easiest ones – leaving the more difficult and less fun tasks for a “later” that, in many cases, never comes – or, worse, comes just before the action needs to be finished, throwing us into a whirlwind of activity, stress, and regret.

    This is why setting priorities is so important.

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    3 Effective Approaches to Set Priorities

    There are three basic approaches to setting priorities, each of which probably suits different kinds of personalities. The first is for procrastinators, people who put off unpleasant tasks. The second is for people who thrive on accomplishment, who need a stream of small victories to get through the day. And the third is for the more analytic types, who need to know that they’re working on the objectively most important thing possible at this moment. In order, then, they are:

    1. Eat a Frog

    There’s an old saying to the effect that if you wake up in the morning and eat a live frog, you can go through the day knowing that the worst thing that can possibly happen to you that day has already passed. In other words, the day can only get better!

    Popularized in Brian Tracy’s book Eat That Frog!, the idea here is that you tackle the biggest, hardest, and least appealing task first thing every day, so you can move through the rest of the day knowing that the worst has already passed.

    When you’ve got a fat old frog on your plate, you’ve really got to knuckle down. Another old saying says that when you’ve got to eat a frog, don’t spend too much time looking at it! It pays to keep this in mind if you’re the kind of person that procrastinates by “planning your attack” and “psyching yourself up” for half the day. Just open wide and chomp that frog, buddy! Otherwise, you’ll almost surely talk yourself out of doing anything at all.

    2. Move Big Rocks

    Maybe you’re not a procrastinator so much as a fiddler, someone who fills her or his time fussing over little tasks. You’re busy busy busy all the time, but somehow, nothing important ever seems to get done.

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    You need the wisdom of the pickle jar. Take a pickle jar and fill it up with sand. Now try to put a handful of rocks in there. You can’t, right? There’s no room.

    If it’s important to put the rocks in the jar, you’ve got to put the rocks in first. Fill the jar with rocks, now try pouring in some pebbles. See how they roll in and fill up the available space? Now throw in a couple handfuls of gravel. Again, it slides right into the cracks. Finally, pour in some sand.

    For the metaphorically impaired, the pickle jar is all the time you have in a day. You can fill it up with meaningless little busy-work tasks, leaving no room for the big stuff, or you can do the big stuff first, then the smaller stuff, and finally fill in the spare moments with the useless stuff.

    To put it into practice, sit down tonight before you go to bed and write down the three most important tasks you have to get done tomorrow. Don’t try to fit everything you need, or think you need, to do, just the three most important ones.

    In the morning, take out your list and attack the first “Big Rock”. Work on it until it’s done or you can’t make any further progress. Then move on to the second, and then the third. Once you’ve finished them all, you can start in with the little stuff, knowing you’ve made good progress on all the big stuff. And if you don’t get to the little stuff? You’ll have the satisfaction of knowing that you accomplished three big things. At the end of the day, nobody’s ever wished they’d spent more time arranging their pencil drawer instead of writing their novel, or printing mailing labels instead of landing a big client.

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    3. Covey Quadrants

    If you just can’t relax unless you absolutely know you’re working on the most important thing you could be working on at every instant, Stephen Covey’s quadrant system as written in The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change might be for you.

    Covey suggests you divide a piece of paper into four sections, drawing a line across and a line from top to bottom. Into each of those quadrants, you put your tasks according to whether they are:

    1. Important and Urgent
    2. Important and Not Urgent
    3. Not Important but Urgent
    4. Not Important and Not Urgent

      The quadrant III and IV stuff is where we get bogged down in the trivial: phone calls, interruptions, meetings (QIII) and busy work, shooting the breeze, and other time wasters (QIV). Although some of this stuff might have some social value, if it interferes with your ability to do the things that are important to you, they need to go.

      Quadrant I and II are the tasks that are important to us. QI are crises, impending deadlines, and other work that needs to be done right now or terrible things will happen. If you’re really on top of your time management, you can minimize Q1 tasks, but you can never eliminate them – a car accident, someone getting ill, a natural disaster, these things all demand immediate action and are rarely planned for.

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      You’d like to spend as much time as possible in Quadrant II, plugging away at tasks that are important with plenty of time to really get into them and do the best possible job. This is the stuff that the QIII and QIV stuff takes time away from, so after you’ve plotted out your tasks on the Covey quadrant grid, according to your own sense of what’s important and what isn’t, work as much as possible on items in Quadrant II (and Quadrant I tasks when they arise).

      Getting to Know You

      Spend some time trying each of these approaches on for size. It’s hard to say what might work best for any given person – what fits one like a glove will be too binding and restrictive for another, and too loose and unstructured for a third. You’ll find you also need to spend some time figuring out what makes something important to you – what goals are your actions intended to move you towards.

      In the end, setting priorities is an exercise in self-knowledge. You need to know what tasks you’ll treat as a pleasure and which ones like torture, what tasks lead to your objectives and which ones lead you astray or, at best, have you spinning your wheels and going nowhere.

      These three are the best-known and most time-tested strategies out there, but maybe you’ve got a different idea you’d like to share? Tell us how you set your priorities in the comments.

      More Tips for Effective Prioritization

      Featured photo credit: Mille Sanders via unsplash.com

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