Create Great Savings Habits
You got this.
When it comes to saving, it’s a principle we know is good for us, but is harder said than done. Why? Because we’re creatures of instant gratification. We want what we want, when we want it. Delaying our gratification for a “later” goal isn’t as fun as satisfying our immediate desire. The United States is one of the most work obsessed countries in the world, so when we get our paycheck, we immediately want to treat ourselves and spend that hard earned cash. And you absolutely do deserve to treat yourself and live a little. So how do we balance the two; doing something our future self will thank us for, and also satisfying our desire to enjoy the now?
Balance my friends. It’s all about the balance. Now the word balance oversimplifies the whole notion of saving, but it works. When we’re able to strike a balance between saving for retirement and our long term goals, but also allocating funds to enjoy the things that we value and truly bring us pleasure, we’ve struck some balance. No need to completely deprive yourself and live a miserable life pinching pennies. Let me break down how we can create some balance and develop great saving habits.
Find patterns in your saving habits.
Self-awareness is key when you’re trying to develop your saving habits. You need to observe where your money is going, when you’re spending, why you’re spending, with whom, and what you are spending on. No need to judge or shame the transactions. Observe your behavior and look for patterns so you can see what needs work.
Spend mindfully and intentionally.
Aligning your spending with your values will create a sense of purpose in your spending which is quite empowering. Spend on what you value and is important to you. For me, socializing and spending quality time with others is very important. I typically do this through lunches and dinners. This spending aligns with my values of quality time, and I get to eat and explore foods which I truly love. Can I meet with friends and not spend a dime? Sure I can. But if sushi is included because I can’t travel to Japan then to me it’s money well spent. I can forego material things to have these experiences.
Research and buy things on sale.
We have the internet, which has prices for everything! Do your research and shop around before you buy. However, if time is valuable to you, this may not work for you because maybe you rather pay full price than spend time doing the research. This goes back to figuring out what you value and is important to you.
Automate Savings-”Pay Yourself First”.
We all have bills to pay to cover our needs. Once the bills are paid, make sure you automate your savings and/or investing and pay yourself first before you spend. Try to schedule the automation on pay days so the money disappears before you can touch it. It happens like magic and once you get used to it you don’t even miss the money that was saved.
Create a budget.
Everyone needs a budget, even if it’s a loose one. I personally have a loose, or flexible budget. What this means is that I pay all my bills first, then I add to all of my investment accounts (automatically of course), and lastly I have different buckets for food, transportation, shopping, etc. If I go over slightly on my shopping because I absolutely needed to have something, I cut back on the other buckets (I may have to eat canned tuna for a while). This flexibility makes room for my “balance”, but also holds me accountable in knowing the funds have to come out of my other buckets. However, be careful when doing this. It can be a slippery slope if you start “borrowing” from different buckets. I don’t believe in getting in debt because of overspending, so I don’t use my credit cards for those reasons.
Track your spending.
Knowing what you’re spending on is so important for creating and managing your budget. I personally don’t like to add up all my purchases so I use the app “Mint”. I love “Mint” because it has all of my debit and credit cards linked to it so it tracks and organizes my expenses. I only use debit/credit for purchases, and rarely use cash because I have a hard time keeping track of my expenses. Use what’s best for you as long as you're tracking where the money is going.
Know the difference between needs and wants.
Do you need it or want it? If it’s a want, wait a day and see if you truly want it. I’ve made a pact with myself that whenever I buy clothes it needs to be worn the next day. If it’s not, it goes back to the store because it won’t be worn and clearly I didn’t need it.
Live within your means.
I know it’s hard sometimes to be tempted by society into buying things you can’t afford. It’s a trap so don’t fall for it. The reality is no one cares what you drive, where you live, and what you have. Most people are too consumed by their own stuff to even notice what you’re doing. Stay true to yourself and live within your means. Simply put, don’t spend more than you make.
