When my ex-husband and I were first married, we were sure that we couldn’t save any money.
We were positive that didn’t have any extra to set aside. We made excuses for why we couldn’t start saving money, and told ourselves we’d start someday — when we had more money.
Later, I learned that saving habits aren’t about how much money you have. It’s about what you do with your money. Even if you think you don’t have enough to start saving, you might be surprised to discover that it’s possible, no matter how little you have.
Needs vs. wants
When I decided that I was ready to start saving, I started by looking at my spending. I was certain I didn’t have any money to spare, but I soon saw that I was spending money on:
- Cable TV
- Eating out for dinner twice a week
- Buying lunch at the college cafeteria every day
- Various impulse purchases at the grocery store
Even though I thought I was only spending money on things I needed, there were unnecessary items using up my resources.
While you don’t need to cut all of your unnecessary purchases, it helps to draw the line between needs and wants. Be honest about your spending and what “counts” as a need. You might be surprised to discover that your wants are creeping into your needs column.
After reviewing our spending, my husband and I decided to eat out just once a week, only buy items on the grocery list, and limit lunch in the cafeteria to twice a week.
Those money saving habits freed up cash that we could put into savings each week. Pretty soon, we were well on our way to a solid emergency fund.
Even if you’re sure you can’t cut back anywhere in your budget, consider taking another look. See if you can cut out some of the wants so that you have at least a few dollars a week to set aside for the future.
Start small and build
Saving habits start small. There is no amount too tiny to save. Start by seeing if you can find one dollar per day. Put that dollar in a jar. Each week, go to the bank and put the seven dollars you’ve accumulated into the bank.
It seems like a small thing, but it’s important. The idea is to build the habit, not have enough money to replace your income immediately. Once you get in the swing of saving, you can build on your efforts.
As soon as you comfortable with setting aside one dollar a day, look for a way to double it and set aside two dollars a day. Part of the fun of saving this way is the fact that pretty soon you start looking for ways to come up with more to save.
For some savers, putting the money in a jar acts as encouragement. You can see the money build up over time and it’s exciting to add more.
However, at some point you might be tempted to raid the jar and use the money for something else. Regular trips to the bank to put the money out of sight can reduce the likelihood that you end up spending the money.
Make it automatic
If you don’t like the idea of bringing money into the bank, set up automatic transfers to simplify the process. Here are some of the ways you can automate your savings habit:
- From your paycheck: Ask your HR department if you can automatically divert some of your paycheck to a savings account or retirement fund. It’s hard to miss what you don’t see, and saving just a small amount from each paycheck will add up over time.
- Automatic transfer: Every month, I have a certain amount of money transferred from my checking account into a savings account designed to help me pay my quarterly taxes. Whatever your savings goal, automate a transfer for $50 each month to start. Later, increase the amount of your transfer.
- Use an app like Digit: One of my favorite tools is an app called Digit. The app connects to your bank account and uses an algorithm to analyze your income and spending habits.
Each day, Digit figures out how much money you could be saving. Whether it’s $2 or $57, Digit transfers the money. The company guarantees it won’t overdraw your account.
With the help of automation, you might be surprised at how fast your savings account builds. Combine strategies, and you could build your savings faster.
Good saving habits lead to long-term financial health
The key to forming savings habits is to move beyond the mindset that says you need a certain amount of money to make saving “worth it.” The fact of the matter is that any amount, no matter how small, is worth saving.
Saving habits help you establish your long-term priorities. If you make saving a priority, that’s a small habit that can grow over time. The important thing is to shift your way of thinking and start a habit that will help you build wealth over time.
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