Cutting expenses is the way to spend less so you have money to save. But unless you are actually putting that money into a safe place to be held for some future use, you’re not really saving at all. You’re just spending less.
Even if you cannot save a great deal of money right now, that’s okay. It’s not the amount you save that matters as much as the fact that you make saving money a regular habit.
Grab all the discounts. Many mortgage lenders and student loan companies offer incentives for their customers who set up automatic payments for their monthly payments. It’s worth knowing you’ll never be late, and if you can get even 1/4-point reduction in the interest rate over time that will really add up to be something significant. Automobile insurers give discounts to good drivers, non-smokers, good students, cars with particular safety-equipment and any number of other situations. But you have to ask. Make the call.
Set dollar limits. Okay, so this sounds curiously like “budgeting.” It is. Deciding ahead of time the amount you are willing to spend for anything is to impose important limitations on yourself.
Fee yourself. Banks and credit-card companies don’t seem to have much trouble socking us with unbelievable fees, so take a lesson from them and fee yourself. Every payday impose a self-tax equal to one-hour’s pay. Consider it the price for having a job and put it straight into your savings account. Give yourself ample warning that upon your next raise, the fee will jump to two-hours’ pay. Every time you make a withdrawal from the ATM or you write a check, charge yourself a set fee of $1 by recording the actual amount plus a buck. Deposits? A $10 fee for each deposit sounds about right. When you’ve collected $50 or $100 in fees from yourself, settle up and transfer the whole amount straight to your savings account.
Embrace cheaper substitutes. Have you given the store brands at the grocery store a chance? If not, you should. The pay-off will be significant, and you could be pleasantly surprised to discover just how many items are identical to the name brand—only the label and the price are different.
Play with your money. Make a decision that from now on you will never spend another dollar. That means all your $1 bills go into a stash. Or get really brave put away every $5 bill that comes into your possession. Save them.
Dreamwash every purchase. Whatever your goal—$1,000 in your savings account, a new house, an all-cash wedding, a trip to Spain—whatever it is, “dreamwash” your mind so that you think of every purchase you make in light of this goal. If it’s something tangible (like a house) print out a picture that represents it and hang it in a prominent place in your home to remind you. Make a copy to keep in your handbag.
No matter how much or how little you have to save right now, you can develop a saver’s attitude. The things we tell ourselves about money and the attitudes we choose have a powerful effect on our behaviors.
I’ve watched people with quite ordinary incomes do extraordinary things simply because they stopped feeling entitled and became habitual savers. That has made all the difference.
