Illustration of a graph drawn on a blackboard showing savings increasing

Finding ways to rein in spending and funnel more money into savings is always a challenge. And during the holidays it may seem nearly impossible—there are gifts to buy and family to entertain, even as the cost of everything seems to keep climbing.

The average consumer expects to spend $627 on holiday gifts alone this year, well above the estimate of $560 in 2017, according to a recent survey by the Conference Board, a nonprofit business research group. 

Only 55 percent of households are spending less than they earn, according to a recent analysis by Federal Reserve Bank of St. Louis, while 30 percent just break even and 15 percent spend more than their incomes. 

Fortunately, there are ways to boost savings that are relatively painless. The key is to use strategies based on behavioral research that take advantage of your mental quirks and emotional responses to avoid making poor financial decisions.

“By understanding your own behavior, it can be easier to stick with a long-term financial plan,” says Meir Statman, professor of finance at Santa Clara University and author of “Finance for Normal People.”

To help you to stay on the path to your savings goals, consider these four guidelines.

Put Away Your Smartphone

With the rise of smartphones, apps, and other digital innovations, it’s simpler and more convenient to manage your finances and everything else, which is why people check them constantly. But there’s a downside to these devices: Having a smartphone is distracting. Even having one nearby can impair your mental abilities.

More on Saving

That’s the finding of a 2017 study published in the Journal of the Association of Consumer Research, which measured the impact of smartphones on cognitive tasks. The researchers conducted two tests, assessing memory capacity and problem-solving ability. The subjects’ smartphones were placed at different distances—on their desks, in their pockets or bags, or in another room. The findings showed that, in general, the closer the smartphone was to the subject, the worse the performance on the tasks.

“The nearby smartphone demands attention, even when it’s not in sight—and resisting that demands puts a drain on people’s cognitive capacity,” says the study’s lead author Adrian Ward, a psychologist and assistant professor of marketing at the University of Texas at Austin. “That can leave people more susceptible to making impulsive choices, rather than analytical ones.”

What to do: When shopping, managing your finances, or anything involving concentration, try to put your device away. “When I’m doing hard work or preparing to teach, I put my phone in a corner, out of sight,” says Ward.  

Go to Consumer Reports' 2018 Holiday Central for updates on deals, expert product reviews, insider tips on shopping, and much more.

Set Small Savings Goals

"When you’re seeking to build savings, it’s often easier to break down your goals into smaller steps,” says Hal Hershfield, associate professor of marketing at UCLA’s Anderson School of Management.

In a recent working paper, Hershfield and fellow researchers Shlomo Benartzi and Stephen Shu looked at the impact of suggesting to new users of a financial app that they save small daily amounts of $5 versus a monthly amount of $150. Presenting the saving option as a smaller sum led the number of consumers enrolling in the program to jump 400 percent, the study found.

“There’s a disconnect between our present selves and our future selves, which makes it hard to sacrifice in the present for our future needs,” says Hershfield. “But framing the savings in small amounts makes it easier to do.”

What to do: Whether you use a financial app or a 401(k) plan to save, automate your savings, even if you start with a few dollars a day. Chances are, you won’t miss the money. And you can gradually increase the amount—many 401(k) plans will do that for you automatically, so the money really gets stashed away.

Personalize Your Savings Accounts

Saving for a future goal often seems abstract, which may make it easier to deprioritize in favor of more immediate needs to spend. But you can make those distant goals feel more urgent simply by applying labels and using visual reminders. By earmarking your goals in this way, you are much more likely to stay committed to them, according to a 2011 study in the Journal of Marketing Research.

The researchers tested savings behavior using visual reminders of the goals, such as photos of the test subject’s children, as well as by dividing the money into different accounts. Overall, households were much less likely to tap the money from these earmarked accounts for other spending needs, the study found.

“Vivid visual reminders of a savings goal can make consumers more vigilant and prudent,” says study co-author Dilip Soman, chair in behavioral sciences and economics at the University of Toronto.

What to do: Many online brokerages and budgeting apps let you customize names for your accounts or goals—your Fidelity 529 account, for example, could be re-labeled Sarah’s College Fund 2030, which could provide a nudge to keep it funded. You may also be able to add icons, such as a picture of your retirement dream home. Or simply use a photo as a screensaver on your phone or computer.  

Focus on Your Cash Cushion

The biggest hurdle to saving is that it requires sacrifice—you must give up spending now to achieve rewards in the future. But once you start putting money away, there are immediate rewards—you have the benefit of having a cash cushion that can help in financial emergencies.

“People often don’t realize that there’s an emotional benefit today to having money in the bank,” says Statman of Santa Clara University. “You don’t have the embarrassment of having to ask your brother for money, or going to a payday lender, because your car breaks down.”

If you are saving in a tax-sheltered retirement account, you can also take satisfaction in knowing that you are getting a tax break from the government. "With a traditional IRA or pre-tax 401(k), you can lower your tax bill by putting money away," says Statman. A 401(k) may also have an employer-matching contribution, which will help you reach your goals faster. 

What to do: Turn your starter savings plan into a habit. "Once you start saving, it builds on itself," says Statman. As you see your balance grow over time, it will become easier to stay with the program.