Turning Savings into a HabitSubmitted by Robert McEachern & Scott McEachern on September 23rd, 2015
Daily we face the pull of advertisements for our hard earned dollars. It’s up to us to find the balance between spending and saving or we’ll find ourselves deep in debt. One of the easiest ways to save is by turning it into a routine. Once you’ve created the saving habit, just like any other habit, it will be hard to break and you’ll be well on your way to a comfy nest egg for retirement in no time! Below I’ve listed three ways to start making your savings into a habit.
Saving your pocket change daily
This is the strategy that I personally use and there are a bunch of benefits from using this technique:
- It’s simple!
- It occurs almost daily, so your piggy bank grows pretty quickly.
- Money that used to slip through your fingertips (because it was just “loose change”, now has a purpose!)
Why do I like this technique? I can control my spending and to an extent even manipulate my spending behaviours. For example, I can go into McDonalds and buy a $1.59 value menu item and use a $20 bill. The advantage is a) I know I physically have the money and don’t have to use a credit card and b) For the rest of the day, I’ll limit myself to only use the remaining bills ($15) because I plan on saving, not spending, my change. It’s a mental thing, but it works for me. If you’re feeling really adventurous, save for $5 bills on a daily basis too!
Warning: Don’t be lazy and go into a grocery store and put your change into a machine that will tally up your savings for you. The fees are usually 10-15% and it takes the away the anticipation of counting how much your new behavior has actually saved you.
Swap out a routine or bad habit and use those dollars to start saving.
I know for a fact that everyone can find a way to cut back on expense that isn’t ‘needed’ to start a savings program if they had to. I suggest you do, by the way. Whether you pay a really large cable or cellphone bill each month that could be reduced, or you slow down your consumption of drinking or smoking - there’s a way. If you get absolute pleasure out of enjoying your morning drive-thru coffee and refuse to give that up, that’s fine, but you may have to make compromises elsewhere and you have to be aware of that.
Once you’ve replace that routine or bad habit with saving, be sure to set a goal of what you are saving for. There’s nothing less motivating if there’s no end in sight! Consider multiple goals at once – vacation, retirement, new couch, etc with different end times, so you’ll consistently be saving for something and always stay motivated.
Set up a pre-authorized withdrawal on your payday.
There’s a saying – “Out of sight, out of mind”. Using this technique automates your savings the day you get paid, so you can be sure the money is available. Too often people promise themselves that they’ll save what they have left at the end of the month only to find not much, if anything, is left when they get there. If you do the reverse and save first, you can basically spend the rest of your paycheque on whatever you want. It’s like a forced budget where you pay yourself first.
Regardless of which tactic you use, it is important to turn saving into a habit. Government benefits consistently change, and group benefits are always changing, so it’s important that you have your own savings to rely on. Remember to set saving goals to keep you focused and motivated and review them annually.