Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Secret #3: Use reminders and checklists

By Penelope Wang, senior writer


Human beings are prone to distraction by immediate events -- helpful in the days when an angry wildebeest might interrupt your dinner, but not so much when you're planning for retirement. "Reminders are one of the simplest, lowest-cost ways to cut through distractions and stay focused on your goal," says Yale's Karlan.

He and other researchers working with banks in Peru, Bolivia, and the Philippines looked at the impact of sending account holders reminders to save by text message or postcard. The savers who got those messages put away as much as 16% more.

Checklists are another effective tool to help you stay on task. As Harvard surgeon Atul Gawande pointed out in his 2009 book, The Checklist Manifesto, the simple act of going through one of these lists can help you avoid missing a vital step.

When surgeons and airline pilots began using them, hospital infection rates and pilot error declined. No wonder so many financial advisers rely on checklists for clients nearing retirement.

Put these findings into action:

Arrange automatic prompts. It's easy: Just set e-mail alerts in your digital calendar or via a personal finance website such as Mint.com. The most effective, says Karlan, are as specific as possible ("put $1,000 in my Roth IRA on Dec. 1," not "save more for retirement"). Arrange for them to hit your in-box at tax time, at bonus time, and after your year-end statements arrive (to prompt you to rebalance).

Put a reminder where you'll see it every day. Remember that Northwestern study showing that thinking about a grandparent can help you save? Study subjects wore wristbands with the acronym WWGD (What Would Grandma/Grandpa Do?) written on them. Hokey, sure -- but effective. Placing a reminder of your goal where you'll see it day in and day out (a photo of your dream retirement house by your bed, for example) could have a similar effect.

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.85%3.87%
15 yr fixed2.96%2.98%
5/1 ARM3.14%3.19%
30 yr refi3.96%4.00%
15 yr refi3.06%3.08%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,597.68 -57.09 -0.34%
Nasdaq 4,807.57 -5.14 -0.11%
S&P 500 1,984.38 -3.28 -0.17%
Treasuries 2.15 -0.02 -0.97%
Data as of 10:55am ET
Company Price Change % Change
Freeport-McMoRan Inc... 10.78 0.59 5.75%
Bank of America Corp... 16.37 -0.07 -0.43%
Apple Inc 112.12 -0.80 -0.71%
Intel Corp 28.28 0.56 2.02%
Alcoa Inc 9.30 0.44 4.91%
Data as of 10:40am ET
Sponsors

Sections

Thousands of Brits were left without pay heading into the holiday weekend after HSBC botched payments for many of its corporate customers. More

How do you run a successful crowdfunding campaign? Indiegogo's CEO Slava Rubin offers his top tips and mistakes to avoid. More

Smartphones are expensive. So using the one your employer gives you can save a lot of money. But in exchange you may be forfeiting control and privacy. More