Saving money can be tough. Saving money by spending money sounds downright impossible, and a little ridiculous to boot. But whether you're saving for a goal or just feeling like your pockets are especially empty after the holiday season, it's important to establish little habits that can help you out as you build your savings.
Money saving articles will often give the same tired advice, like not buying a Starbucks latte everyday. But what if you don't like lattes to begin with? Below are tips that list some different, practical ways to save your cash that you can actually follow.
These are strategies for building good spending and savings habits, rather than the small (and temporary) changes often recommended as New Years' resolutions. So while the immediate payoff may not be obvious, you can, over time, make a big difference in your finances and feel better about the way you spend.
1. Switch Your Expensive Habit
Let's go back to the Starbucks example again. Half the money saving tips that you see have a variation on this advice: "Start by cutting out your morning coffee run!" This might as well be saying, "Saving money is easy - just don't spend money!" Cutting expenses by purchasing cheaper products (or abstaining from purchase altogether) is a good way to save, but it's usually not sustainable. There's probably a reason that you started going to Starbucks every morning in the first place; maybe you like the convenience, or the ritual, or you just really like a good latte. Cutting that habit might save you money in the same way that starting an extreme diet might make you lose weight. It can be effective to begin with, but at some point you're likely to just gain that weight back; it's just a band-aid, not a solution.
Try exploring which of your habits are costing you the most money in your day-to-day life. Then, instead of just trying to quit that habit cold-turkey, think of a way to alter it. If you buy a Starbucks latte every day because you like the ritual of spending some time on your morning coffee, buy a French press. It may seem a little counter intuitive to spend more money in order to save, but this is just a way of looking at the bigger picture. The $30.00 you've spent on the coffee maker is equal to maybe a few weeks of buying coffees individually, but now you have a physical item you can use to make your morning coffee for years. And the fact that you now have a new and rewarding habit for your coffee (along with a new toy) means you're less likely to revert to your Starbucks habit when you get sick of sacrificing it two months down the road.
The same logic can be applied to a number of those little things you do every day; the ones that become so ingrained you hardly think about the money that you're spending on them. Maybe it's the parking lot that you use close to work. It's $2.00 more expensive than the others around it, but you park there every morning because it's the most convenient by a few blocks, and because you've been doing it for three years and it's an easy habit. Instead, park in one of the less expensive lots and buy a Fitbit. It's about a hundred dollar investment, depending on which model you purchase - that means that in less than three months of parking in the cheaper lot on weekdays, you'll have paid it off. And now not only do you have a new Fitbit, but the motivation of seeing your extra steps can help you to keep using the lot that's a bit farther away from work. In a year, you'll have saved about $400.00, even taking into account the money for the Fitbit you purchased.
2. Choose an "Instant Gratification" Goal
Here's another one that might sound a bit counter-intuitive at first: when you're trying to start saving money, make an initial goal to save for something that is silly, self-indulgent, and relatively inexpensive. Really! There's a good reason for why this works, and it's similar to the tip above: It's easy to say that you're going to save money for a worthy and long-term goal, but less easy to stay committed six months in and trying not to spend some of that money you've saved up. By starting out with an "instant gratification" goal, you're simultaneously building good saving habits and training your mind to associate saving with positive feedback - getting something that you want.
By setting an easy, achievable goal, and saving consistently toward that goal, you're creating a habit, whether it's putting $5.00 away a month or $500.00. When you use a little of it right away to fund something you want, your brain makes that connection: saving = good. Remember that feeling, and apply it again when saving for your larger goals.
There's another factor in making this approach beneficial. Beginning to save for a larger goal, like a house, a college fund, or even a vacation, can be daunting. So daunting, in fact, that it's easy to put off or ignore all together. Creating a habit for a smaller goal - say, "I'm going to put away an extra $10.00 a week for a month to buy a pair of earrings I've been wanting" - is a lot easier than immediately jumping to "I'm going to put away an extra $10.00 a week for five years to save up for the down payment on a house." It's a bit of a trick: you've set yourself up to put that money away for a short-term reward. But by doing that, you've started saving toward your long-term goals - and once you've got that pair of earrings, or video game, or date night all you have to do is continue the trend.
3. Pick Your Battles
Think again about the similarities between saving and dieting. It's no coincidence that this makes a good analogy to saving money; both are really lifestyle decisions that often aren't treated properly as such. In this hypothetical, you've decided you want to lose 20 pounds. You know that the best way to do this is to eat a little better and try to make it to the gym more often. However, you've just seen a Pinterest ad that swears you can lose weight twice as quickly if you just cut out all carbs, sugar, fats, salt, and liquid from your diet. All about efficiency, you start this diet and lose seven pounds rapidly. However, you're also miserable. A month later, you've dropped the diet completely, regained the weight, and now you're back to square one.
While it may seem like an overly simplistic comparison, the same thing can easily happen to your finances. Imagine that instead of trying to lose 20 pounds, you're trying to put aside $20,000.00 to fund a down payment on a house. You could decide that you're going to put away $500.00 per month toward this goal, but at that rate you won't have the full amount for nearly three-and-a-half years! Instead, you resolve that you will not spend any money that isn't vital for your survival, and put away another few hundred dollars a month - you'll have a house in no time.
For a few months, you forsake takeout for whatever is on sale at the grocery store, ignore your friends' pleas to meet them at the bar, and weigh every mile you drive against the gas money you're spending to get there. At some point during this time, you see something that you want - maybe an expensive bag, or an opportunity for a mini-vacation.
"I've been so good," you think. "I've been saving so much money, I can buy this one thing."
It's easy to do, and once it's done it's easy to do it again. Suddenly you're set back by several months, and you go through the same cycle of excess saving and excess spending again and again until you've made it to your goal in the same amount of time you would have by saving the lower rate initally - only with a lot more sacrifice and suffering.
This isn't to say that you can't achieve a savings goal faster by making some smart sacrifices in your spending. However, it's important to pick your battles so that saving becomes a healthy habit instead of an obsessive burden. If it's important to your happiness that you can eat takeout once a week, make sure that's in your budget and cut costs elsewhere to put toward your savings. It doesn't matter if you're choosing to put the money into something that seems a bit more frivolous - as long as it helps you create a sustainable and realistic savings plan. If not having your nails done professionally makes you cringe each time you catch sight of your own fingers, but you don't mind spending extra time cutting coupons for the grocery store as long as you can do it with expertly-painted nails, make that decision consciously and follow through.
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