I am often impulsive and usually stubborn and so saving money was not something that came naturally to me as I grew up, even though my parents and grandparents modelled frugality and prioritised experiences over things. Over the past few years, however, working towards greater intentionality and purpose has made a positive difference to my perception of saving and overall ability to save. Today I want to encourage those of you who do not save regularly to take steps to make saving a habit.
As I have highlighted before, emigration was the push we needed to get our finances more in order and as we established our new life on the opposite side of the world we adopted many positive habits. We started to save regularly for the first time but with house prices putting home ownership squarely beyond our reach, it was hard to get really focused on saving. When my sister started planning her wedding a few years ago, it was the catalyst we needed to get serious. We saved for 18 months to attend the wedding and even saved up to take a detour to Disneyland on our way around the world.
We had such a wonderful time and made memories that really will last a lifetime but what made it even more special was knowing that it was all paid for in advance. There were no bills waiting for us on our return because we had saved hard in advance to make the trip a reality.
To make our trip possible, every time we got paid, I manually transferred money into a separate holiday savings account. Month by month as we got closer and closer to our target it felt amazing to see that amount grow. This process showed us very clearly how much money we could actually save if we were intentional about it and we have continued the same plan ever since. We still pay money into our holiday account and our house saving account every single payday.
Sometimes there are bumps along the way. We had just reached a milestone in our saving towards a house deposit when our car died and we needed to replace it. Frustrating – yes. But not that saving has become a habit, we will save consistently and patiently until we hit the goal again.
The art is not in making money, but in keeping it.
Making saving a habit
In this podcast episode, one of my favourite writers Gretchen Rubin, outlines a useful framework for habit change. Two of her strategies that I found most helpful in terms of developing the habit of saving are accountability and scheduling.
To begin with we were accountable to my sister – if we hadn’t got serious about saving, we wouldn’t have been able to attend her wedding and that certainly kept us on track. I also find it very helpful to schedule saving in my diary. Each payday is highlighted and I manually write how much money I am going to manually transfer to savings on that day beforehand. Personally I love the satisfaction of making a manual transfer although I know some people may find it more helpful to make the scheduled automatic transfer to remove temptation.
Make a list of everything you have coming in each month and then make a list of all your fixed expenses- things like your mortgage or rent, utilities, childcare and food. Then see what is left over and decide on a conscious amount that you are going to save each month. It doesn’t matter whether the amount is big or small – $5 or $500. What matters is the habit that you are developing to make saving as automatic as your morning coffee or fastening your seat belt in the car.
What if there is nothing left to save?
It may be that there is not much left over on paper once you list your fixed expenses. If that is the case for you, then you may need to look at reducing some of these fixed expenses. To free up money and have more to save we cancelled Sky TV and reduced our cell phone package to the most basic plan. We also started to think more mindfully about every purchase we were going to make, asking ourselves the following questions:
- Do we really need it?
- Do we really need it right now?
- Would it be something we would take with us if we moved countries again?
- Can we get it cheaper somewhere else?
Next week, I will be writing more about ways to make more room in your budget and create more opportunities to save but in the meantime, if you needed to read this today, take the first step towards becoming a saver. If my impulsive, impatient self can do it – so can you! x