Tips on saving money when life keeps getting in the way.
I was always bad with money. A few times over the years I’d notice that I always seemed to just scrape by, somehow having just enough. I was contsantly vowing to try to keep a little of my wages aside next month, but it never seemed to be possible.
Something would always come up, an unexpected expense or a birthday. I knew the benefits of saving money, but life would consistently get in the way.
Eventually after a long year where I never really got any better or worse off, I concluded that it was so unlikely that I earned exactly the amount I need to live on that the problem must be me!
So I set about looking into what I was doing, and experimented with chaging those behaviours. Through these experiments I learned a few important lessons:
Identify and break bad habits:
I wasn’t the kind to go clothes shopping or buy expensive items when I couldn’t afford them. My problem was trickier than that: little cheap things, but lots of them. When I went food shopping, I’d be strict about following my pre-planned list, but I’d buy a snack for the walk home, and maybe something for my wife and kids too.
Not a problem in itself but a little bit extra spent on every supermarket trip becomes a habit “I’ll just pick up our usual treat” and that’s when it builds up.
Accumulate a handful of habits like that and you’ll waste a sizeable amount of money over time. To get on the right track you need to keep alert for those moments where you spend more than you need to - or spend without thinking on something non-essential.
It takes a little effort to catch yourself at these moments, but it's important to say aware and avoid going on autopilot when shopping.
Intentionally replace them good habits:
Creating and sticking with new habits won’t happen on it’s own, so for a few weeks at least, you will really need to go out of your way to make sure you stick to your plan. Habits are best broken and formed one at a time, and it apparently only take a few weeks of regular repetition for them to stick.
The first week or so is usually pretty easy because the idea of the new habit is fresh in your mind and your enthusiasm for it is at it’s peak. The danger point is in the second and third weeks when your enthusiasm wanes, the idea starts to seem less interesting, and most crucially you haven’t seen any results yet. This combination of action, effort and then lack of reward kills many good habits before they have fully formed!
Open a savings account online - and be strict about using it!
The two critical factors in a successful money saving plan are:
Put the money aside on payday or as soon after as possible. Wait any longer and ther balance will be going down and you’ll start thinking about putting the saving off until next month. Do it before you do anything else and then let it go. Don't dwell on it once it's done.
Make sure the money you want to keep is kept out of reach.
It’s important not to rely on willpower - because it’s so easy to give in, and one relase can cause your self-beleif to collapse and then you have to convince yourself all over again that it's worth getting started again.
Make it painfully inconvenient to get and use that set aside money and you’ll have greater success. We are all lazy and pushed for time so making things difficult and time consuming to do is a great deterrent!
Find a finance blog, podcast or book which has a tone or style that suits you.
There are loads of resources, especially online, to help you learn about finance and saving. The most important thing is to be honest with yourself if you are making bad choices - and being open and willing to know that you have to change.
It’s vital to face up to the reality of your situation, and make positive steps from there.
The problem is, many finance sites can be stuffy or business oriented - and if that's not your things it can be a boring read. Luckily these days, there are many people writing for non-businessy audiences. Have a look around and see who you get on with.
Wealthy people treat money very differently to poorer ones - and this is not about being evil or greedy, it’s just about being in control and using money positively. I used to bury my head in the sand and try to avoid finding out my balance until the ATM reject a withdrawal. Not smart.
There are of course, hundreds if not thousands of things you can do it improve your financial situation, but these were the biggest steps for me, and the ones that had the most impact.
Why not try to make the next year your best ever, by breaking those bad money habits and forming some new positive ones?