Ever wondered why it is easier to spend than save? Regardless of how hard we try, we still find ourselves struggling to save money. There are many reasons for this: the constant temptations and marketing campaigns, the lack of motivation, and even the fact that we’re paying more attention to comparing prices than looking at what we need. However, there are a few things that can help turn saving into a habit.
Yes, that’s right! Saving is a habit and like every habit, it takes a lot of practice to stick. Here are a few tips that can help turn saving into a habit.
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Make Saving a Priority and Track Your Progress
If you want to save money, the first step is to make it a priority. It may seem difficult at first, but knowing that there are plenty of tools available will help. The starting point is to do a budget. A budget sounds very technical because it is an accounting word. However, it is simply a statement of your income and what you plan to spend it on. There are many approaches to doing a budget, but you can use an approach that is easy for you and suits your personal finances.
To make saving a priority, you have to leave room in your budget for it. Adopting a zero-based budget where you note all your income, plan all your expenses and include a column for savings ensures that you make a plan for your savings. Then you need to either automate it if possible by setting up standing orders for the amount you budgeted to go straight to a savings account.
Make sure to review your budget and savings target regularly. It’s useful to monitor your saving rate to see what percentage of your income you save and be encouraged to increase it. For more information about budgets, check out our handy budget guide.
The more you do your budget, review it monthly and at other milestones, the more you will look forward to doing it. You will find it thrilling and addictive and will feel something is missing when you skip it. So, do what you can to be consistent. For example, you can set up monthly budget/review meetings with yourself or a partner.
Find Ways to Cut Back and Learn to Live with What You Have
If you have done a budget as per the above and find it difficult to put money away because all your income goes to expenditure and paying back debt then you need to review your expenditure and decide what is absolutely necessary and what you can do without. This is not often easy as a lot of things seem very important and necessary. But on a closer look at our finances, we can still find areas where we waste or where we can put off spending for a bit.
For instance, I use to buy clothes a lot more than I do now, the majority of the time it was more out of pleasure and response to adverts than need. I now have a sinking fund for things like clothing. I save a bit every month into my cloth fund and put off buying as much as possible. Then when I really need something, I dip into my fund.
If you have gone several months without something you thought you needed, do you really need it? Create a system that helps you put off spending as much as possible on non-essential items. Obviously, I am not talking about things like food or utilities. It is the “nice to haves” like that 10th piece of shoe or bag you buy in anticipation of an outing that you have not even been invited to.
Start Planning for the Future by Investing in Products That Protect Your Savings
Another way to start turning saving into a habit is by investing based on your future goals. We have several posts on investments as well as how to protect your finances from inflation that is worth checking. I believe investing your savings is a really good motivation for building a really good saving habit.
Remember, that a lot of investments are not risk-free and you can lose your capital. But when you invest carefully, seeing a return on your money will be a strong motivation. I invest in index funds via Vanguard and seeing my investment grow makes me want to find ways to increase my monthly investments. What is even more motivating is that index funds require very little input, you sit back and your money just works for you.
Give Yourself Some Self-Reward by Designating a Certain Amount of Money as an Allowance
It can often be tiring and frustrating if you have had to work with a very tight budget over time. There will be days when you will wonder why and there will be things that will trigger you.
I still occasionally suffer from this, I have real serious doubtful and self-pity days. I have come to identify my triggers. Sometimes it is just as a result of stress and other times it’s just some envy. I see other people and I wonder why I don’t get to enjoy luxuries even though I work very hard. I try to note these triggers so that I can snap out of them. I know there are people worse off than I am, so I pull myself out of the comparison trap and remind myself of things to be grateful for.
However, it is so important to let your hair down once in a while. Create a pot/sinking fund in your budget for the fun stuff. So that when you need to splurge you just take some money out of it to treat yourself. This means that you will not have to eat into your savings, put something on a credit card or draw on an overdraft setting you back on your goals.
Like I mentioned above, I now have a small fund going so that occasionally I treat myself to a nice dress, a meal out, a manicure and this really helps. About 2 years ago before the pandemic, I spent a whole day at a spa, this was so refreshing and rejuvenating and I think I need to do so again occasionally just to reset. In other to turn saving into a habit that sticks, it is important that it doesn’t become burdensome. Planning for fun ensures that you don’t become discouraged along the way.
Visualize How You Want Your Life To Be and Create Goals To Get There
I wrote the Instagram post below to say that you need to desire a change to make anything into a habit. So start to think and visualise what a healthy bank balance can do for you. How do you see your life in a few years? Are there goals you want to achieve that will require a substantial amount of money and can that motivate you to make an effort to take budgeting seriously and start to build your savings?
A good vision of where you will like to be in maybe a few years time is a huge motivation for turning saving into a habit. I always say it is good to have a bit of flexibility to engage new opportunity but planning and visualising the future is important.
The term cash is king is true for companies as it is for individuals. An emergency fund and savings and investments towards medium and long term goals for big things like retirement, house purchases and so on gives you peace of mind and the ability to truly focus on adding value to yourself, family and the community around you.
Which of the tips resonated with you? Are you going to start turning saving into a habit? Let me know in the comments below.
In conclusion, visualising and thinking of your goals could also make you realise that your desired lifestyle is unreachable with your current savings rate. This is okay and would create the avenue for you to think of solutions and ways to boost your income, cut expenses and increase your savings rate.