Most of us would love to save more. And most of us have tried, with a burst of motivation, a spreadsheet, and a fresh start on Monday. A few weeks later, the habit quietly fades.
Now imagine a plan that does not ask you to give up a single dollar of today’s income, does not rely on willpower, and still lifts your savings in a big way. It sounds too easy, yet it was tested in a real workplace, and the results surprised the researchers who designed it.
The short answer: a plan called Save More Tomorrow asks people to commit in advance to put part of their future pay raises into savings. In its first test, the average saving rate rose from 3.5% to 13.6% over 40 months, and about 80% of those who joined stayed with it through four raises.
Here is how it works, why it works, and how you can borrow the idea in your own life.
Key Takeaways
- In the 2004 Save More Tomorrow study by Richard Thaler and Shlomo Benartzi, 78% of employees offered the plan joined it.
- About 80% of those who enrolled stayed in the plan through the fourth pay raise.
- The average saving rate climbed from 3.5% to 13.6% over 40 months.
- The trick: saving rises when your pay rises, so your take home pay never shrinks.
- You can copy the idea with a simple automatic transfer, even if your workplace has no such plan.
The Problem: We Want to Save, But Cutting Spending Hurts
Researchers have long noticed that many people save less than they intend to. Thaler and Benartzi argued that two human traits get in the way: bounded rationality (we cannot weigh every long term choice perfectly) and weak self control in the moment. When you ask someone to cut today’s spending, the loss feels sharp and immediate. The benefit feels far away.
So they designed a plan around those traits, instead of fighting them.
The Idea: Say Yes Now, Save Later
Save More Tomorrow, often called SMarT, works like this:
- Decide in advance. Employees commit today to put a portion of future salary increases into savings.
- Wait for the raise. The extra saving starts only when a raise arrives, so take home pay does not go down.
- Let it repeat. With each raise, the saving rate steps up automatically.
In the researchers’ first test, which followed employees through four annual raises, the average saving rate went from 3.5% to 13.6% over 40 months.
Why It Works So Well
The design quietly solves four problems at once:
| Problem | How the plan handles it |
|---|---|
| Cutting spending hurts now | Saving comes out of a raise, so you never see a smaller paycheck |
| Putting things off | You decide once, in advance, and it runs by itself |
| Self control runs out | Automatic steps replace daily willpower |
| Starting feels big | The first step can be small, and it grows on its own |
How to Copy It Yourself: Four Steps
You do not need a special workplace program. Here is a simple do it yourself version. This is my adaptation of the idea, not something the study itself prescribes.
Step 1: Check What You Already Have
Look at your employer’s savings plan or your bank’s tools. Some plans offer automatic increases in contributions. If yours does, switch it on.
Step 2: Make Your Raise Promise Today
Write one sentence now: “When my pay goes up, I will send part of the increase to savings.” Decide the share in advance. Even a modest portion of each raise adds up over several years.
Step 3: Automate It
Set up an automatic transfer on payday, so the money moves before you can spend it. If you do not receive regular raises, pick a fixed date once a year (for example, your birthday or the first of January) and raise your automatic transfer a little.
Step 4: Review Once a Year
Put a reminder in your calendar. Each year, check that the transfer is running and nudge it up if you can. A tiny step, repeated, is the whole secret.
Smart Extras for Real Life
- Give your savings a name. “Trip fund” or “Safety cushion” feels more real than “Savings.”
- Keep it out of sight. A separate account makes the money harder to spend by accident.
- Celebrate each step up. A small, free celebration, such as a nice walk or a favorite meal at home, makes the habit feel rewarding.
- Be gentle with yourself. If a year is tight, pause the increase and keep the base transfer going.
Frequently Asked Questions
What is Save More Tomorrow? It is a savings plan designed by economists Richard Thaler and Shlomo Benartzi in which people commit in advance to direct a portion of future pay raises into savings.
Does it really work? In the first implementation described in the 2004 paper, the average saving rate rose from 3.5% to 13.6% over 40 months, and about 80% of enrolled employees stayed in the plan through the fourth raise. These are results from workplace tests, and your situation may differ.
Do I need a raise for this to work? Not exactly. The original plan ties saving to raises, but you can copy the idea by increasing an automatic transfer by a small amount at a fixed date each year.
Will my take home pay go down? Under the original design, no. Saving rises when pay rises, so you do not see a smaller paycheck.
Is this financial advice? No. This article shares general information from research. For decisions about your own money, consider your own circumstances and, if you wish, a qualified advisor.
The Bottom Line
Saving more does not have to feel like sacrifice. The research behind Save More Tomorrow shows that a small promise made today, attached to a raise you have not received yet, can add up to a big difference.
Today, take two minutes and write your raise promise. Then set the automatic transfer. Your future self will quietly thank you.