Over the weekend I was thinking about future travel plans. There are so many places that I would love to visit. But, that’s just not feasible if I don’t buckle down and step-up my savings game.
The best place to start saving money is with small, everyday habits. After a while, these habits will become automatic. And, best of all, you’ll be able to save your way into getting whatever you want.
Just remember that this is a process that will take time. Personally, I do really well for a long time — then fall off for a while. Then, I get going again. So far, things have been going smoothly for me after implementing the following 11 simple savings habits.
1. Change your mindset.
“Saving money and gaining control of your finances is a mind game before anything else. You can tell people how to save more money but they won’t actually do it without changing their mindset first,” author and finance blogger Amanda Abella told OppLoans.
For most of us, changing our mindset first is essential because what we’ve learned about money is from an outside force.
Personally, I attributed my spending and saving ways to my mom. She saved money all year so that we could alway have a nice vacation every year growing up, and so that we could have a nice Christmas every year — I mean, really nice.
She also made sure that in our large family we had new clothing for school. Five days worth of outfits so that we could rotate those pieces and not have to wear the same thing in a week. If I planned it right, I could mix and match many weeks.
Amanda Abella goes on to say that some of the most common beliefs that influence our relationship with money include:
- Money doesn’t grow on trees.
- It’s impossible to make money in this economy.
- I can’t afford this.
- Money is the root of all evil.
- It’s not possible to profit off your passion.
- Affluent individuals are greedy.
You’ll want to get rid of your negative associations with money — especially if they include anything on that list. In order to assess and change your money mindset, Abella says, “write out [your] money story.” She strongly suggests that you’re honest and use actually pen and paper. And, “the sooner you own it, the sooner you can start to heal it.”
To guide you in this exercise, she recommends answering the following questions:
- What have you been telling yourself about your financial situation?
- Where did these stories come from and how have they affected your finances?
- What are some of your hidden fears about money?
- How has your money story evolved over time?
When everything has been written down, review it. Just remember to not be judgmental or too harsh on yourself. It should be lighthearted. Amanda even suggests that you “just laugh at it and move on.”
Afterward, you should be able to identify the “stories you may have picked up about money—whether from your parents, your partners, your broke friends, or society as a whole.” But, that doesn’t mean that this has to be your tale.
In fact, “you can rewrite your money story any time you want,” she says. Remember, it’s never too late.
If you need some more inspiration, I recommend reading the following 10 money mindset books, such as The Automatic Millionaire by David Bach
2. Record your expenses.
Writing down or recording your expenses is probably not how you want to spend your leisure time. But, keeping a record is essential if you want to reach both your short-tern and long-term savings goals.
In a nutshell, you want to keep track of all your expenses. Everything from that cup of coffee you get on the way to work to utility bills should be included. The reason is simple, having the amounts and what you spent your hard earned cash on is concrete proof on how much money you’re spending so that you can trim the fat.
For example, maybe you realize that you get takeout every day for lunch. To rectify this, you could start packing your lunch. But, if you’re struggling to figure out which expenses you need to cut ask two simple questions, “what do you need?” and “what you’re ultimately trying to do?”
To ensure that your figures are accurate, use bank and credit statements. You could also use spending trackers and budgeting tools like Mint, Personal Capital, You Need a Budget, or Clarity Money.
3. Learn how to set SMART goals.
When it comes to savings, you have to be intentional. For example, it would be fantastic if everyone was a millionaire. But, just declaring that you want to have a stacked bank account isn’t going to make that goal a reality.
Instead, you need to more specific by identifying what your exact money goals are and how you’ll actually reach them. And, the best way to do this? By setting SMART goals.
SMART goals are Specific, Measurable, Attainable, Realistic, and Timely. For instance, as opposed to saying I want to be rich, you could say, “In the next 10 years, I want to save $500,000 for a vacation home.” The reason the SMART goals work is that they allow you to track your progress and it keeps you focused if you get off-track.
4. Wave goodbye to debt.
Debt isn’t always a terrible thing. I mean mortgage not only puts a roof over your head, but it could also potentially be an investment if you build equity. In this case, you might view this as “good” debt.
What you really need to focus on are your bad debts. You know what I’m talking about. Those vampires that suck the life out of your financial independence and savings.
But, getting rid of “silly debt” or debts where you’ve just been extravagant or a spendthrift can be a challenge — especially if living paycheck-to-paycheck. The good news? It’s not impossible.
If you are really in trouble, you should likely look into debt consolidation plans or settlement programs. Another idea would be paying off your debt with something like the debt snowball method — where you start with the smallest of your debts and pay all you can on that one debt until it’s gone. You pay the bare minimum payment on your other debts. Then you take the next debt and pay that one off and so on, working your way up to the last debt.
Basically, you work until you maybe have your mortgage payment and maybe a car payment — no credit card debt. It IS possible.
Most importantly, you need to change your daily habits to achieve your goals. That means avoiding unnecessary expenses, buying used instead of new — and selling items that are just collecting dust. Or, you start side hustling to earn a passive income. It’s also good to side hustle until your debts are paid down to a manageable level.
5. Automate as much as you can.
Did you know that you can set it and forget it when it comes to saving money? It’s true. One popular example would automatically transfer a percentage of your paycheck into a savings account each month.
You could also download micro-investing apps like Acorns or Robinhood. These tools let you invest your spare change by rounding up your purchases. However, you can also automatically add funds to your savings account as well.
And, speaking of automation, sign-up for automatic payments for recurring bills. Besides making tracking easier, having auto-payments will prevent you from missing a payment. In turn, you won’t get hit with any late-fee penalties.
6. Try an anti-budget.
When it comes to savings habits, one-size doesn’t fit all. As Paula Pant perfectly puts it in an article for The Balance, “not everyone is a natural saver, and not everyone loves budgets or spreadsheets.” If you “get bored or tired of meticulously tracking your expenditures,” you might want to try out alternatives, such as the anti-budget.
For the anti-budget, “You simply pull your savings from the top and spend the rest,” explains Pant. “There are no budget categories to keep track of.”
“All you need to know is how much you can afford to save each month,” she adds. “You shouldn’t try to save so much that your checking account is $0 before you can pay the bills, but once you find a suitable amount (a good rule of thumb is to save 20% of your income), set up an automatic transfer at the beginning of the month so that your savings are put aside first.”
7. Make the most of substitutions.
When it comes to certain items, it’s usually better to go with quality over quantity. For example, a pair of Ray-Bans may set you back around $150. But, if you take care of them you’re going to get mileage out of these shades then a pair of $5 glasses. In fact, over time, you spend more on those cheap sunglasses because you’re constantly replacing them.
At the same time, there are certain areas where you can find more affordable substitutes. For instance, if you aren’t loyal to a brand of peanut butter, you could purchase a generic brand. Or, you could switch brands depending on what’s on sale.
8. Master the art of negotiating.
Obviously, you can’t be negotiating all the time. You aren’t going to be able to walk into your local grocery store and haggle the price of apple juice or other items you are purchasing. However, there should be wiggle room on some of your other expenses.
Examples would be making a call to your internist, cable, or phone provides to land a better price. You may even be able to contact your credit card company to see if they can give you a better rate. And, there are tools like Trim that will identify and negotiate the best rates on your behalf.
9. Use coupons and discounts as much as possible.
Here’s a secret for you; even wealthy individuals use coupons. In fact, everyone from Warren Buffett, Bill Gates, Lady Gaga, and Carmelo Anthony are known couponers. So, follow their lead and be cost-conscious by only making purchases when you have a coupon.
Moreover, before buying anything, see if you qualify for a discount. Many stores and restaurants will hook you up if you’re in college or a senior citizen. Healthcare workers and military personal can also join in on the fun. And, don’t forget about your birthday freebies!
10. Establish spending barriers.
Despite your best efforts, it can be difficult to control your impulse to spend. The good news? You can prevent this from happening by establishing barriers, such as:
- Only shopping in-person with cash.
- Deleting saved payment information you have stored online.
- Using free store pick-up or delivery so that you stick to your shopping list.
- Unsubscribing from emails so that you’re not tempted to spend.
- Adopting the 30-day rule where you don’t purchase an item for a month. If you still want it, then go ahead and buy it.
11. Watch your savings grow.
At the end of each month, set aside the time to review your progress. It’s a simple way for you to make sure that you’re sticking to your savings plan. And, since you can see that you moving the needle, you’ll be motivated to keep up the excellent work.
Also, this will let you know of any potential problems. In turn, you can fix them before they get any worse.