How To Get In The Habit of Saving Your Money
Saving money is one of the hardest things to talk about and even harder to actually do.
According to a Bankrate Survey, 30% of Americans have no emergency savings, and a $1000 unexpected cost would push them into debt. These are the staggering, maybe slightly disfigured, messages that we hear in the news about money.
One thing that is clear is that many Americans are struggling to save and do not feel financially secure. This guide can help you break down how you think about saving money on everyday or monthly expenses, and start thinking about how to save for the future.
Find your ‘why’
Chances are you’ve been here many times. You’ve heard about a bunch of different budgeting strategies, hunkered down and begun the journey. Things go very well in the beginning then something happens that derails your whole savings plan. All of a sudden it seems impossible to get out of the spending loop again and your plan comes to a halt.
It’s important to have a solid commitment when it comes to your money mindset around saving. There are so many ways to get off track — take some time to find out why you’re saving.
Maybe it’s for a vacation — then picture a tropical beach to motivate yourself. Maybe it’s covering yourself in an emergency — think of how amazing it will feel to not have to go into debt when something happens.
Take 5 minutes and journal what your life would look like if you accomplished your savings goal. What would it feel like? How would it change your life?
It’s best to not think of saving money as a restrictive process. It’s about figuring out your financial goals (short and long-term) and prioritizing your spending around them. A great way to begin that process is by dividing up savings into short and long term categories.
A short-term savings goal example would be, “I am going to automate $50 of each paycheck into my high yield savings account towards building a starter emergency fund of $1000.”
A longer-term might be something like, “I really want to work towards saving $30,000 for a down payment on a house in 5 years.”
Once you figure out your financial priorities, it means it’s time to get serious about a budget.
What to consider when creating a budget
While you’re setting up your budget it’s important to make sure that you are picking realistic goals. This means that you need to be able to assess the amount of money that is flowing in and out of your account.
It might be scary to look at how you’re spending money due to shame or feeling like it will be overwhelming to establish better habits. Most people don’t like it but it’s such an important step of taking control of your financial situation.
Keeping track of your money flow has never been easier with an abundance of different personal finance software applications out there (like Charlie!) Alternatively some people enjoy making a clear framework for their budget that gives them structured guidelines to make sure they’re within their means.
Coming up with a budgeting method will help you keep track of whether you are spending your hard-earned money wisely. Simple changes such as bringing your lunch to work instead of buying it every day can make room in order for you to meet your savings goals.
5 daily money-saving tips
I always tell my clients: you don’t have to stop spending money on things. You just need to stop spending money on things you don’t care about. There are ways to save money while also not depriving yourself of the little pleasures in life.
Here are 5 ways that you can save money daily and for short-term success:
- Plan out your grocery list: Not going shopping on an empty stomach is half the battle, but the grocery store is a money-spending black hole. Make a grocery list of the food you want to cook in the upcoming week, stick with it and check for local coupons or loyalty programs to maximize your savings.
- Order less at restaurants: Hopefully going out every day isn’t part of your normal budget, but that doesn’t mean you need to eliminate it entirely. Split a dish with a companion, or take some home for lunch the next day. Take advantage of any happy hour deals, and try to limit the amount of alcohol you consume while out.
- Keep the change: This one can also be a fun savings game. Use a jar or old fashioned piggy bank to store all your change in when you make purchases with cash. Depending on the size of the jar you could have a nice sizable stockpile sitting on your counter.
- Use discounts on entertainment: There are so many different apps and specials for going out to see a movie or even a play. Many theatres or operas will offer day-off rush seats, and museums often have free days. Groupon is an oldie but goodie, as is Goldstar and TodayTix. Checking your credit card rewards program to see if you can redeem points for free movie tickets is a fun and inexpensive way to treat yourself.
- Wait 24 hours before purchasing anything over $100:Shopping sprees and impulses are strong. However, sometimes it’s good to sleep on it before making a large purchase. Oftentimes the infatuation has worn down by the next day.
Month-based money-saving tips
Monthly expenses might involve debt payments of various kinds–credit cards, student loans, cars, cell phones, etc. But there are ways to make these expenses more manageable.
- Negotiate your bills: Crazy as it sounds, it is possible to negotiate your monthly bills. I’ve saved $1200 by lowering my monthly recurring bills and it starts by calling customer service twice a year highlighting my customer loyalty to score better deals.
- Pay off your credit card in full: On average credit card APR, Annual Percentage Rate, the percentage that you pay if you have not paid off your previous month’s debt starts around 15% and can go all the way to 30%. Do everything you can to pay your bills on time and in full.
- Switch up your cell phone plan: There are countless different cell phone providers and plans out there, and it’s worth some time to comparison shop. This might be bundling with a family member or cutting down on your data plan.
- Cancel unnecessary subscriptions: Chances are if you have several subscription services — you might not be using them to their fullest potential. It might be a good idea to consolidate the number of subscriptions you have or split them with a friend/family member. A great example is our movement towards subscription television entertainment. There are many options out there and if you have all of them you might be spending as much as you were on cable TV.
Tips to reach your long-term savings goals
These savings goals are probably the hardest to implement and stick to, but long-term savings goals are most likely the type to get you to financial freedom.
- Reevaluate your spending every quarter: Every month is going to look slightly different financially. It will never match up to your exact budget but it is good to set a time in your calendar on a quarterly basis to see how you are doing with your budgeting and savings goals. (I call it a money date!)
- Refinance your mortgage: This one is going to heavily rely on what is going on with market rates. But this is a huge opportunity that could save you tens of thousands of dollars over the course of your mortgage. To put it in perspective: a $300,000 30-year fixed mortgage with a 3.5% APR could end up costing you $450,000 overtime.
- Remember your “why” and set a savings goal: think back to earlier in the article. Long-term saving goals are all about motivation and mindset. Pick something that is meaningful to you and your future, and stick with it. Make it a game using fun tools like coloring pages or a jar full of buttons to represent your progress. It can make savings look more tangible and the efforts feel rewarding.
Saving money doesn’t have to be boring or complicated. It can be a fun game to play that has extremely rewarding results. Start finding your “why” for your savings goals and take a deep breath each time it feels overwhelming. Don’t beat yourself up if you slip up here and there. Perfection is not the goal, consistency is.