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Money Saving Tips


Saving money is tough. Everybody says you should do it, but nobody teaches you how. We do not talk much about saving money at home, they don’t teach us at school and it is not really part of the American culture. So how are you supposed to learn? As you are well aware at this stage in your life, when it comes to saving money, you are completely on your own to figure it out. Before we can solve a problem we need to first define it. What are the causes and the symptoms of our chronic inability to save money? Is there one thing that we can just fix and then our savings accounts will balloon? If there are many causes, what do we do about each? The problem is, there are as many causes to our inability to save as there are people alive. It is too big of a topic to address in one article. Instead, I will focus on one reason we do not save money and suggest a few strategies that may help.
The biggest problem that I see is not the money, it is our ability to see needs for it we didn’t know existed. When we just start out as young adults, we don’t make much and we don’t spend much – unless we get into a lot of credit card debt. But we have a running list of things we want or what society says we are supposed to want. As we progress in our careers, we make more and start going down that mental list checking things off one at a time. There comes the house, the stuff to fill the house, the car, the latest gadgets, etc. The problem here is that we do not exhaust that list, we just keep adding to it so that we never run out of things to want and to buy. Unless we are ultra-rich, we cannot outrun that list!

So, what is to be done about this situation? I recommend a few strategies that all have one goal – pretend that you have less money than you do and learn to live without it. It is not super-scientific or sophisticated, but neither are the ways we manage our money. Since we have a lot of bad money-savings habits, let’s create some new, better ones. Below are five strategies that I hope will be effective in helping you think differently about money.
"... pretend that you have less money than you do and learn to live without it. It is not super-scientific or sophisticated, but neither are the ways we manage our money."
Pretend you took a 5% pay cut
Start pretending that you just took a 5% pay cut. What would happen to your monthly spending? The best way to find out is to try. Open a new bank account and set an automatic transfer to that account the same days that you get paid. The point here is to look at your cash flow without that amount and live without it. Can you identify any savings to make it work? Make it a goal to not use that money during the month when you think you will be short. If you make it, increase the percent!

Save half of every income increase you get
Next time you get a raise, do not just let it go into your paycheck and disappear. Make sure half of it goes into the same savings account of better yet – an investment account that will earn you a return. After you meet with your boss, divide up your raise into regular after-tax amounts and setup an automatic withdrawal to put away half of it. After all, you lived without this raise before, so you should be able to sock away at least some of it every year!

Create a fictional savings account and “put” things in it
If the above is too tough with your current financial situation, do it in your head or on a spreadsheet for a while. Each time you spend frivolously – and you know when you do! – record the amount. Do it for 6 months and see how much money you would have if you did not just spend it. And do not be too generous to yourself when you define “frivolous.” Each time you reach into your wallet without thinking – that is frivolous! You may be surprised what you discover about yourself and your habits by the end of six months. And that is the point here – become aware of what is stopping you from saving money. The next step will hopefully lead to a real change!

Allow yourself one “weakness” but cut out all others
Everything in life involves a trade-off. You cannot have it all and neither do you need to. For example, if you are into bags, then make it your thing and cut down on something else. Buy a nice bag, but do not buy another pair of shoes. Coordinate the new bag with an existing pair of shoes you love and voila – a new fabulous look!

View your older self as your dearest friend
This is by far the biggest and most impactful change you can make to improve your financial situation. We all live in the present and think about the future in very vague terms. We know we live longer and have only ourselves to depend on, but do not do much for this future self of ours. Start imagining yourself 10-15 years later and ask yourself whether this future self will be better or worse off because of the choices you make today. In 15 years, would you go back and thank yourself? What would that thank-you note say? If you cannot come up with a sizable list, then you have some work to do!
Money Saving Tips
You may see that there’s a lot of pretending involved here and may not think this will be effective. But your mind is your most formidable foe when it comes to saving money. You need to trick it into becoming your friend because that is the best weapon you have in your arsenal. Your income is not going to skyrocket overnight, but I suspect that your mental list will not disappear overnight, either. Each time you put a little money away, you are finding a balance between wanting too much and not having enough. Over time you may find that saving money will become your favorite item on the list.

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