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5:26 pm - Friday December 9, 2016

Increase Your Motivation to Save by Illustrating Your Progress

| Budgeting | Rating: 4.5
by Numan

If you’re an avid manager of your personal finances you are probably keeping a budget of your incomes and expanses. Most of us are hard working people trying our best to save a decent amount each month. Since our monthly savings add up quite slowly and our loan repayments go even slower we sometimes have a hard time noticing the big picture and the general direction in which we’re headed.

I have found illustrating that direction or trend is very helpful in motivating me to do my best to increase my monthly savings. Since you probably have the figures available on your budgeting excel sheet illustrating the trend shouldn’t be hard work.Think of the following graph illustrating the trend of increased savings and reduced debt for a certain household. This household has borrowed 100,000$ for 5 years and has a savings of 20,000$ which grows by 500$ each month.

If we look at the trend for 10 more months we can easily see the lines converging in the near future. This illustration is a great motivator in my opinion as the next question you’ll ask yourself when you see the trend is what will happen if I increase my monthly savings to 750$ instead of 500$? Well, here’s the answer:

Increasing the monthly amount saved has an even stronger effect due to compounding interest. Obviously, there is more to compound on.

Visualising and Illustrating are powerful tools. They help make abstract concepts and trends more tangible for us and enable us to understand the bigger picture. I heartily recommend using illustrations and visualizations when analysing raw data.

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