Your parents, grandparents, friends and everyone else tell you that you need to be saving, and you know they’re right. But it’s easier said than done, isn’t it?
So how do you actually commit to saving? Transferring money into your savings account is easy, but so is transferring it right back to checking when you need it to pay for that concert ticket or new pair of shoes.
In order to commit to saving, you’re going to have to change your mindset about saving, get clear on what you value and make it harder for yourself to spend your savings.
Step 1: See saving as a non-negotiable expense
It’s simple—just change the entire way you think about money and start seeing saving as something you have to do.
Ok, so changing your mindset on saving isn’t that easy, or else you would have done it already. Your problem is that saving is negotiable to you. But why and how should you change that?
If you’re having trouble putting money into savings or leaving it alone once it’s there, your problem may just be that you don’t value saving for the future over the things you want to enjoy in the present. Maybe when you do manage to set money aside, it’s because saving is one of those things you’re “supposed to do”—and this often isn’t a strong enough reason not to dip into your savings when you feel like it.
If that’s the case, sit down and figure out what you’re saving for. Maybe you’ll need a new car in a couple years, or maybe you want to take a trip to Europe next summer. List all of the big purchases you’ll need or want to make in the foreseeable future, when you’ll need to make them and then estimate how much they’ll cost so you can begin to put together a realistic savings plan.
Next, solidify your why. Why do you need to save for a down payment on a new car? Why do you want to travel? Maybe the answer seems obvious—because you need a car to get to work, or because you want to see the world while you’re still young. But dig deeper into your reasons for why you’ll want to save for your various goals and really picture the outcome. Let’s take the car example:
If I save enough to put down at least 20% on a new car, I will:
- save more in the long run because I won’t be spending as much on interest
- have a smaller monthly payment and have more money to spend on other things
- have a safer, more reliable and comfortable car
- be able to relax more about money
Then visualize what will happen if you don’t save for that goal:
- My big auto loan bill will take away from my other expenses
- I’ll have to settle for a less-than-ideal car
- I’ll be more stressed out about my bills
Don’t skip the important step of understanding all the reasons you want to save and visualizing your life once you meet your goals. Having these concrete details in mind will make it easier to say no to impulse purchases.
Step 2: Identify what you’re wasting money on
That is, identify the items you’re spending money on that aren’t improving your life. Most advice articles on saving will tell you to skip the daily latte if you want to save more, but you don’t necessarily need to. If your morning coffee run brings you real joy, day after day, then don’t deprive yourself. But if it has just become a habit, and you know coffee from home with a splash of your favorite creamer is just as good, then cut it out and go only when you know it will actually make you happy.
Doing so requires paying close attention to how your purchases make you feel. You may want to take notes to remind yourself later that your drive-thru meal didn’t taste any better than a sandwich you could whip up at home, or that the novelty of your brand new smart phone only lasted a week and you could opt for a slightly older model next time.
Step 3: Put your savings out of reach
It only takes a few clicks to move savings money into your checking account. So if you find it extremely hard not dip into your savings, you may want to consider making it less accessible by opening an account at a different bank, one that isn’t attached to a checking account or card. Shop around for a savings account with a good interest rate, and then make automatic deposits to this new, less-accessible account with every paycheck. Your money will be safer from impulse purchases if taking it out is a chore.
Once you’re clear on what you really want to use your money on and you’ve made it easier for yourself to save, you should find you have the momentum to start working towards your financial goals. Just remember that smart money management takes practice and intention, so don’t forget to reassess and reaffirm your goals and your reasons for them from time to time.
For more advice on smart money management, check out Adulting 101: Financial Well-Being.