Isn’t it frustrating to feel you can be saving more? You have great intentions at the beginning of each month – yet, somehow, you spend most of your money. Here are some ideas from Christopher Alarcon to help you get back on track
CREDIT: This is an edited version of an article which originally appeared on Lifehack
Get intentional and think about what having more money will bring to you. Use these reasons as your north star. The next time you’re tempted to spend money remember why you’re saving in the first place.
Then, start adopting better money habits. Go through this list and note which habits you’re weak and strong in.
Be honest about your bad habits
The most important habit you can learn is to face reality.
The reason why you haven’t been able to save for a long time is that you’ve delayed accepting the facts. It’s not easy to accept that you’re not saving as much as you should; it’s easier to ignore this and spend the money you could be saving, hoping you’ll have enough left over.
Go ahead and admit you’ve been lying to yourself for some time now. This isn’t to make you feel bad; instead, be proud of yourself for being honest and show some self-compassion. Now you’re aware that you carry bad habits, you can get out of them.
Recognise your money mentality
When you hear ‘savings’, what comes to mind? Do you get excited because you’re on track for retirement? Or, do you cringe. knowing you have been spending your money poorly these past few weeks?
Figure out what money stories you’ve been telling yourself and challenge them. For example, if you believe you should spend your money as it comes, ask how this has turned out over the last few years. Your goal is to challenge bad money stories to create better ones.
Define your needs and wants
It’s okay to like expensive brands; the problem is trying to buy everything because you want to keep up with friends and family.
Create a list of items you truly need; for example, a house and food are needs. Then, create your list of wants for items such as high-end shoes, the latest smartphone, etc.
You shouldn’t buy everything from your wants list immediately; instead, pick one and create a budget for it. Save money first and reward yourself with an item from your ‘wants’ list once you’ve reached a savings goal.
Understand your cash flow
You may believe you understand your cash flow – the money coming in and out of your account.
Imagine you get paid twice per month, and spend an approximated amount of your salary on expenses; the rest sits in the same bank account without a purpose. This is a recipe for disaster. Use money tracking apps to better track your cash flow; just sync-up all your accounts and let the app do the rest.
Start automatically saving instead
Stop trusting yourself to save money; you’ve already seen where this has got you. However, don’t feel bad; we’re all human and prone to mistakes.
Create an automatic budget to help solve the problem. For example, have your money automatically transferred to different accounts. Take this a step further and open external savings accounts to automatically transfer money into. This way you make it more challenging for you to withdraw your money. Now, when payday comes, your money is automatically saved.
Be frugal with your money
It’s okay to use your money to buy things that make you happy but, if you’re not saving enough after taking out your expenses, you need to take a different approach.
I’m against adopting frugality for the sake of doing so but being frugal isn’t binary– there are different levels to frugality. If you’re having trouble saving, look for areas where you can cut more – for example, instead of paying for Netflix, watch free videos on YouTube.
Repeat this process until there are no more areas left to cut back on. Cutting services and being more frugal than you’re accustomed to is only temporary; once you’re able to save more, you can go back to the services you love.
Review your financial progress daily
You need to review your finances daily and, with money tracking apps, you’re able to do this with no problem. Even if you don’t review your finances daily, at the very least create a reminder to check where you stand once per week or month.
To encourage this habit, make reviewing your finances fun. For example, review them while eating your favourite food, or reward yourself with something small from your ‘wants’ list. Once reviewing your finances becomes a habit you’ll be in a better position to save more.
Shamelessly use vouchers
You don’t use vouchers only when you’re broke. Get into the habit of using vouchers to save as much money as possible. Don’t shop for your groceries and then search for vouchers you can use. Instead, review the vouchers available and buy the items on sale in a given week.
Even if you’re only able to save £5 per week, this is money you would’ve spent.
Pack your lunch
A £5 meal doesn’t seem like a lot; it may even feel like a bargain, depending on how good your food was. The problem is doing this five times a week, sometimes even twice per day. All of a sudden, your £5 meals add up.
Make it a habit to pack your lunch for work. Pick one day during the week to meal prep for the entire week and watch your savings grow.
Adopt the 30-day rule
Have you ever purchased something only to regret it a few days later? If so, the 30-day rule is for you. Each time you’re going to make a new purchase set it aside for 30 days. If, after 30 days, you still want to buy this item, do it. This won’t stop all bad purchases, but it will cut out the most irrational ones.
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