Get Motivated to Save (Importance of Near-Term Goals)

The importance of near term goals in staying motivated for long-term financial objectives

Near-term goals can make a big impact on setting up the right habits and staying motivated for your longer-term financial objectives.

In our mini-series on 5 Green Geek Principles we’ve covered the logical side of things – the impact of little actions and understanding the potential of each dollar – but not the emotional yet. The last three principles focus on different elements related to motivation. Specifically, principle 3 – Get Motivated to Save (Importance of Near-Term Goals), digs into our inherent obstacles to long-term savings and provides some examples of finding motivation in the present to ultimately help with your long-term goals.

Have a Near-Term Goal for Your Saved Money

So, we’ve run some numbers and we know that saving now can really help out your financials in retirement… but to most of us, thinking about the details of life in retirement in your 30’s is hard to visualize and not honestly not all that exciting. There are things you know you can do with that money that are exciting and rewarding now, and you only live once, right?

You’re right, you only do live once, and maximizing life in the near-term is important. That is why I believe if you really want to get motivated for saving, you need to have some realistic near-term goals.

Present bias blues

Just saving for some date in the distant future is hard, because in reality, it is quite difficult for us to image the value of things far out – like retirement. This is due to the cognitive bias known as the present bias* – “the tendency of people to give stronger weight to payoffs that are closer to the present time when considering trade-offs between two future moments” (O’Donoghue, &, Rabin, 1999). Thus, we favor things now and think of them as significantly more valuable than things in the future. As an example of this, most people would prefer $100 now, rather than $125 in 12 months [1].

If we were actually thinking about this rationally, we would say, “wow, $125 in 12 months is a 25% return rate – that is incredible, I’d be stupid not to take that”, but instead, the majority of people would take the $100 now.

Use the allure of short-term rewards to your advantage

In realizing and respecting this strong preference for the near-term, I suggest coming up with a concrete goal of what saving money could do for you soon. Say in the next 5-10 years, or sooner. Not only does a near-term goal help to provide motivation to start saving, but working towards it will establish the habits that will make you successful in meeting your long-term goals as well (win-win!).

Do some thinking as to WHY you want to save money. What are the benefits that will motivate you most? It’s not very motivating to save money just to have money. Figure out what sort of goal you’ll be excited to work towards. And saving for a purpose that is just a few years away is way more exciting and motivating than something 35+ years down the road.

Only you can pick a suitable near-term goal, but here are just three examples to get you thinking of the possibilities:

1. Debt pay off

Starting with the more obvious here. As with many others, I have personally found focusing and setting clear goals for paying off debt to be particularly motivating. Especially if that debt can be paid off in 3-5 years or less. It is easy to track progress and clearly see the headway made on debt pay down goals. You can see how each payment reduces the amount of monthly interest you’re being charged, which can make it rewarding to keep moving forward on those additional payments and see total reduction in monthly interest since you started tackling this goal.

Once you get close to paying off the debt, it can also be really exciting focusing on reducing any last expenses and throwing everything you have at the final debt amount. Finally, once it’s gone, you’ve just freed up a decent amount of monthly cash that can now be used to accelerate the pay down of other debt (the “debt snowball” approach) or used towards your next savings goal. Lastly, I have to admit it also just feels so liberating to get that monkey that is a debt off your back. It not only frees up that cash but provides a sense of relief and empowerment that makes all the effort worthwhile.

Some people want to be entirely debt free, including no mortgage. I often think of debt strategically, considering the potential stock market return (averaging 7% after adjusting for inflation) vs. the guaranteed return if paying off debt. If you have a high interest rate that is close to or above that average market return (for me I think of rate of 6% and above), paying off debt is a no-brainer. However, when you’re looking at a mortgage below say 4%, it’s tough to ignore the fact that you money could likely be more optimized by being invested on low-cost index funds. However, creating a goal to personally stay motivated is often more important to staying the course and overall results than creating a goal that theoretically provides the highest returns. So consider what approach gets you most inspired.

2. A fully paid for vacation every year

Here’s a savings goal example that a little more fun. Say you love a good all-inclusive vacation or other getaway that costs about $3,500 to go on. By saving $700 monthly for 5 years, at a 7% return, you would have saved up $50,000. This $50,000 savings would generate enough annual interest on its own to pay for a full vacation for every year for the rest of your life! (And experiences are actually one of the few things that provide the most positive benefits to our lives: you get the benefit of being excited prior to the experience, going on the actual experience, and then the life-long benefit of the memories from these experiences.)

3. A three-day weekend, every weekend

Personally, I can’t think of anything better that money can buy than time. One of our most scarce resources. I’ve particularly come to appreciate the value of time as a parent, seeing how rapidly days seem to go by and how quickly kids seem to grow up. In the near-term, saving enough money could certainly buy back your time by feeling both empowered and financially secure enough to ask your manager to say going down to a 4-day week work.

If you wanted to work just 4 days a week but keep your current take-home pay the same, this could be accomplished by saving 20% of your monthly income for 10 years towards this goal. Let’s say you make $60,000 annually or $5,000 monthly. You’ll need to make up $1,000 a month of income if you go from the traditional 5 days down to 4. Saving 20% of your monthly pay, or in this case $1,000 / month for 10 years, we know by the 10-Year Rule reviewed in Principle 2, that with a 7% rate of return, we will have enough saved up (about $171,500) to provide an estimated $1,000 worth of extra income forever.

1) $1,000 / month saved x 10 years @ 7% annual return = $171,500 in savings.
2) Then, $171,500 in savings, @ 7% annual return, provides $1,000 / month of additional income.

You could get to this goal in only 5 years if you were able to sock away about 48% of your income – difficult, but possible.*

Think of the things you could do with the additional time of that extra day each week. Spend more time with family, start a side-business you are particularly excited about, take up new hobbies you’ve always wanted to. Using money for this purpose can have some serious and long-lasting life benefits… and these benefits stay with you all the way through retirement too!

I’m not advocating to avoid saving for retirement here. Retirement savings is very important. However, I think forming solid savings habits first is essential and finding a motivating near-term savings goal will facilitate getting your savings activities ramped up. Once you have solid saving habits down, it is so rewarding and empowering to track and see the progress you’re making, my bet is you won’t have difficulty finding ways to build up retirement savings as well. The key thing, which we’ll discuss in the next principle, is to just get going.

Other Life Benefits of Savings

Money can also buy some pretty interesting things, like comfort, confidence and opportunity. When you have more savings built up you have more options available to you. As mentioned above, you can have the option of considering part-time work vs. full-time. If you want to be entrepreneurial and try something on your own, or say make a switch in careers, having some savings to support you can allow you to take the risk and follow your passion.

Don’t like your current employer, or your company all of a sudden goes under? You have the luxury to take time off and consider what may be best. Even in your existing job, having wealth built up gives you that confidence to ask for what you want – you don’t have to capitulate to your employer’s unreasonable requests and can advocate for yourself, knowing if the answer is ‘no’, that you have alternatives since you don’t necessarily need your existing job to survive to the next paycheck. I’ve heard 0thers refer to the concept of this opportunity – confidence that money brings to your employment relationships – as having “F U money”. It can just open up new possibilities and realities for you.

You also sleep easier at night. When you have decent savings built up you also feel like you can handle any twists and turns life throws at you. Earlier this year I went for a routine dental cleaning and discovered some emergency dental work was needed which quickly added $4,000 in unexpected medical expenses. A few years ago that would have derailed our annual savings plans, but now, with a disciplined savings approach down which pretty much runs on autopilot, this surprise expense feels like only a minor hiccup along the road. Similarly, knowing that when my wife and I put our minds to it, we were able to get rid of $135,000 in student debt in less than 2 years, now even the largest potential expenses and tragedies don’t feel insurmountable.

Spending Smarts: Buying “Less But Better”

While my wife and I have developed some good savings habits over the years, I wouldn’t say we are super frugal, and I certainly am not going to pretend that I’m immune to unnecessary spending. There’s some awfully cool stuff out there and frankly, I regularly share details about things I’ve purchased on this blog. However, I’ve become much more discerning about what I buy. I better appreciate the opportunity cost and what I’m giving up by buying something.

When I buy something now, I weigh the opportunity costs of forgoing the lifelong labor of the dollars I will be spending. The purchase is a conscious choice that I would rather have the “thing” than the extra money. I find that simply being more aware of this trade off helps to cut out a lot of the “fat” or unnecessary purchases – like the extra latte when we’re passing by a Starbucks or a new shirt just because I haven’t bought one in a while.

Instead, the things I end up buying are more practical, meaningful, more valuable, will actually end up saving me money (through improved efficiency), or otherwise further enable my life in a way that justifies foregoing the savings opportunity. There are more things in my life that “spark joy” now as Marie Kondo would say, and saving efforts help to focus on the essentials. The overall result is “less, but better”.

Find Your “WHY”

Through the rest of this site, it is my goal to share with you ways to cut expenses, lower your impact on the environment, and put automated systems in place to start building your wealth from these savings. I’m certainly happy to be a guide. But also realize you’ll need to find your own purpose for getting motivated to save. You may want freedom, more choice, a different lifestyle or more altruistic or philanthropic goals. Figuring out your WHY and some near-term goals will help you keep going for the long haul. Your vision and goals will help you make more intentional choices when you’re debating the opportunity to buy something now versus saving for the opportunity you have in mind for the future! The more compelling your future vision and goals, the easier it will be to accomplish them!


Once you have some initial motivation, it’s important to keep that momentum and make real progress! Thus, the next Green Geek Principle covers tips to Just Get Started and keep making headway towards your goals!

Read the other posts in this mini-series:

#1 – Little things add up
#2 – Understand the potential of each dollar
#4 – Get motivated to save (importance of near-term goals)
#3 – Just get started
#4 – What gets measured gets managed

*We have talked about a few cognitive biases across the green geek principles already. If you’re interested in reading through the list of other various biases for fun on Wikipedia  like I was, you can check those out here. To add one last bias though, I ultimately hope these Green Geek principles will help inflict you with the “Curse of Knowledge” bias, wherein once you are better informed, it is hard to go back and think of things the way you previously did before gaining the new knowledge. Hopefully you can start to see what a dollar saved could do for you and not think about regular purchases the same way again.

**Since my wife started working, we have been able to live off of less than one income and save the entire other income, with annual savings rates between 50 and 60% of our take home pay.