Making Saving Fun, Or The Power of Setting Concrete Goals

photo: Kamikaze Stoat 

Last year, my daughter Iris and I spent a week in Japan. Did we have a good time? Is Godzilla a big lizard? We have so many good memories of Japan that we’ve been torturing my wife Laurie with them ever since. (“Remember the place with the amazingly delicious fish? Oh wait, that’s the entire country.”)

Finally, during breakfast, Laurie put her foot down. “If you two like Japan so much,” she said, “why don’t we all go next summer for a month and rent an apartment?”

“That’s crazy,” I said. BusinessWeek named Tokyo the world’s most expensive city in 2010. But we were all high on the idea of living in Japan for a month. So I researched apartments and airfares and made up a spreadsheet. “It looks like it’ll cost about $12,000,” I reported.

Luckily, after the last Japan trip, we’d set up a savings account for the next one. It had $300 in it.

The power of concrete goals

At this point I want to make something clear. If a $12,000 vacation sounds absurd to you, I assure you it sounds even more absurd to me. My wife is a schoolteacher and I’m a freelance writer. We’ve never taken anything like a $12,000 vacation in our lives and will probably never do it again.

Furthermore, we agreed that if we were going to do this, it would have to be done without reducing our monthly retirement savings, college savings, or charitable contributions by so much as a dime. No dipping into the emergency fund, either.

Trent Hamm of the popular finance blog The Simple Dollar and the book of the same name writes a lot about the power of concrete goals. “If you have a discrete goal that’s attainable and you’re keeping it fresh in your mind,” he writes in one of my favorite posts, “then whenever you make a financial move, ask yourself if that move is in line with that goal.”

How it’s done

We scratched other vacation ideas off the calendar and increased our automated monthly Tokyo savings as much as we could. That’s the boring, pay-yourself-first part that every personal finance writer is required by law to put on his business card.

The fun part is coming up with the rest. Between now and next summer, every dollar I don’t spend today represents 83 yen I can spend in Tokyo. So instead of taking myself out for sushi in Seattle this week, I put the money in the Tokyo fund.

Birthday checks from Grandma? Into the Tokyo fund. The penny jar is full? Put it in the Tokyo fund. My daughter told me she would contribute her allowance—after she buys an important Lego item. I told her I wouldn’t accept it, but that she could save up and use it for spending money in Tokyo.

We’re using SmartyPig.com for our Tokyo fund. SmartyPig is an FDIC-insured savings account specifically designed for concrete goals. Watching the little red piggy bank fill up as you approach your goal is addictive. It integrates with Mint, but not with the Mint Goals feature. Since Mint Goals is totally cool, however, I went in and created a goal manually:

Now every time I log into Mint I can see where my priorities should be.

Be audacious

Recently, Hamm posted about The Art of the Audacious Goal: “Setting a huge goal for yourself can shock you into action and sometimes make you go beyond what you believe you’re capable of.”

I asked Hamm about his current audacious goals. He and his wife want to buy some land in the country and put up a house on it—all paid in cash. “We pretty much keep this in mind constantly, with pictures of country houses all over our current home and regular conversation about it,” he says. “We’re doing all sorts of little things to save up for it and the idea of the shared goal is wonderful.”

Will our savings frenzy last until summer 2012 or will it peter out somewhere around April 2011? I have no idea. And I don’t think we could muster the same enthusiasm for college or retirement saving, which is why those have to stay on safe, boring autopilot. (If we were in debt or saving for a down payment on a house, however, I think those could be deliciously concrete and audacious goals.)

But I think we have a good shot. For the first time, I’m getting the same rush from saving as from spending. I can taste that shrimp tempura already.

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.