Much like dieting, we often have good intentions when it comes to saving but are prone to the occasional distraction. And when it comes to regular saving, the greatest challenge is the temptation of instant gratification. Humans just aren’t hardwired to commit to long-term savings. The good news, however, is that there are ways to make saving pain-free. If you follow a few simple steps, you will quickly see the benefits and your bank balance will thank you for it.
To start, set a savings goal. Having a clear goal will motivate you to save. That’s not to say you must commit to a large sum from the outset. Work out what’s affordable for you and commit to saving that sum on a regular basis. Making it achievable will also ensure you have some money set aside for enjoying some of the finer things in life as well. Thinking about what that regular savings sum could provide in the future is a great motivating factor to help ensure you stick to your savings plan. And once you have a savings habit in place, chart your progress. Watching your balance increase every month is always extra motivation.
The key to becoming a regular saver is making small changes that won’t affect your quality of life.
Speaking of motivation, be honest with yourself about what is a “must-have” or a “nice to have” when it comes to purchases. The key to becoming a regular saver is making small changes that won’t affect your quality of life. Many people follow either extreme: not saving anything at all or sacrificing all treats and luxuries to save a lot. The best thing to do is to find a balance. Delaying certain purchases or purchasing lower-cost alternatives will help you to become a regular saver without any significant impact on your lifestyle.
Make sure you review your spending every six months and re-prioritize if needed. The luxuries to keep are the ones that are relatively low-cost but give you the most pleasure. The ones to cull are those that you aren’t overly attached to but are costing you a lot. Making small changes can lead to big savings.
Also, don’t forget to spend some of your savings. This sounds contrary to earlier advice, but it’s important to enjoy the fruits of your labor. Most of us find it tough to continually strive toward a goal without any reward. The same can be said for saving. Just remember to always balance living today with planning for the future.
Finally, to become a great regular saver, you need to have a plan. In the same way you would build a training or diet plan to achieve a fitness or health goal, create a savings plan. Without it, how will you manage your money and reach your financial goals?
This column is taken from the January 2021 issue of Dockwalk.