Module 3 · Your foundation
Day 6 of 11 · about 10 minutes
Most people mean to save. Then payday comes, the money is in the checking account, and the month finds ways to use it.
What the research found
Economists Brigitte Madrian and Dennis Shea studied one company before and after it changed its 401(k) plan. When new employees had to sign up themselves, 37% were enrolled in their first months. When new employees were enrolled automatically and had to opt out, 86% were (National Bureau of Economic Research, 2000).
Same people, same company, same plan. The only difference was the default. Self-made people use this on purpose. They make the right choice once and set it up so it happens without them.
Try this today (10 minutes)
- Log in to your bank and set up an automatic transfer to savings on payday.
- Pick an amount small enough that you won't cancel it. You can raise it later.
- If your employer offers a retirement plan with a match, check that you're enrolled.
The honest note
The same study found that many people stayed at the low default contribution rate the company picked for them. A default only works as well as the number you set, so review it once a year. This is general information, not financial advice.
Write it down: print Workbook 3, Your foundation. It has space for this lesson’s exercise and a week tracker.
The Selfmade Course · Day 6 of 11
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