Saving money can often feel like an exercise in sacrifice and self-sabotage, especially when it seems like there is never enough money to go around. After paying for all the necessities, it can often feel like there is nothing left to tuck away for a rainy day.
But the truth is that we often convince ourselves to spend money on things that we just don’t need. Saving money is a game of psychology, and demands consideration for and an awareness of the unconscious triggers that prevent us from keeping our money in the bank.
Below are some helpful habits to help combat the more impulsive and seemingly innocuous behaviors that cause us to overspend.
Develop a saving plan
One of the most difficult, but perhaps the most essential, components of developing good spending and saving habits is to develop a clear-cut saving plan.
While you may feel pretty confident in your ability to moderate your spending, developing a budget and understanding exactly how much money needs to be put into savings can greatly change the way you view the money that you have available to spend. That can help curb those desires to buy impulsively.
Taking the time to plot an exact monthly expense list, which can track your spending across a variety of categories including bills, entertainment, groceries, etc., can dramatically change the way you perceive your finances.
When you have to actually evaluate how much money you will allow yourself to spend on things that were always treated nonchalantly before, you may find yourself reconsidering a lot of those purchases that you thought were necessary.
In fact, developing a system of saving can even lead to more happiness, since many people find a comparable level of pleasure from saving as spending money.
Automate, automate, automate (did I mention that you should automate?)
In order to ensure that this habit of saving becomes more than just temporary, find as many ways to automate your transactions as possible. This can take shape in a variety of ways, including: direct deposits, automatic transfers from checking to savings accounts and automatic bill pay – although there are some caveats.
By creating these automatic actions, you relieve yourself of the burden of making sure that they happen each month, meaning that you are less likely to break the saving habits that you created when formulating your budget.
Create saving goals and don’t be afraid to celebrate . . . a little
Once the basic outline of your saving plan has been created, decide upon some saving goals that are reachable within the short- and long-term. This is incredibly important, because without goals, it becomes very easy to lose interest and fall back into bad spending habits.
Just like shopping, the immediate excitement of starting a new project can quickly become mundane – and even a little disappointing – depending on how much money you are able to save each month. The luster will eventually wear off.
In order to keep yourself motivated, create goals that may be reached within a matter of months. Consider goals that can push you to work a little harder toward putting your pennies in the bank. And when you reach those goals, don’t be afraid to reward yourself with a night out or a small gift.
These small rewards will keep you interested in your plan. By creating milestones, you create significance in what you are doing, which is constantly being reinforced. This will help to make the pleasure of saving last longer, and help to stave off any feelings antithetical to your saving goals.
Focus on goals not on losses
Another strong motivator for persevering is to always consider the “light at the end of the tunnel” rather than the dank icky cave that you may be momentarily passing through.
Often when saving, especially for young workers, money can be tight, which can lead to frustration when a flashy new doo-dad decides to nose its way into your noggin. This type of consumer consternation can often lead to you questioning the value of saving when the thing that will “make you happy” is right in front of your face.
To assuage these frustrations, think about the time it has taken you to build your savings to where it is now, or look toward the next goal you are aiming for and the mini-celebration you will have upon hitting that goal.
While the impulsive item you think you want is right in front of you, avoid viewing your inability to purchase it as a loss. It is all about perspective: Rather than viewing yourself as unable to buy it, consider the fact that maybe you just don’t need it and are better off for keeping your money in your pocket.
Shop with a plan; avoid the impulsive
The best way to avoid the type of scenario presented in the above tip is to always prepare a shopping plan before going to the store. This is something we often do when planning a trip to the market, but don’t dismiss this when planning any type of shopping trip you may make.
If you know you have to swing by a Target or Walmart on your way home from work, take the extra minute to determine exactly what it is you need before going in. There is a reason these stores organize their aisles the way they do: So that you have to meander through a number of them before you find what you need. This concept is based on impulsive shopping, which is an emotional way of making decisions.
These feelings trick you into focusing on the pleasure of buying new items rather than considering the fact that you are overspending. By creating a list of needed items, you avoid the aimless wandering and avoid putting yourself in a situation of purchasing something unnecessarily. Also, having a shopping strategy can help to save time in the store too which is always nice.
I would like to close with two supporting tips that help to improve the effectiveness of all the tips listed above.
First, try to keep cash on hand instead of relying on credit cards. It is well documented that people tend to spend less when they have to physically turn over their cash instead of swiping a card. This comes from the idea that when we use credit or debit cards, we do not actually see the money being deducted from our accounts. We don’t feel the negative psychological effects of using our money and instead focus on the pleasure of buying new things.
When we spend physical dollar bills, we see every last cent go, meaning that the extra item that we may have casually thrown into the basket on the way to the register now has an economic weight. When we have to actually calculate the money that we are going to spend before spending it, we are more likely to reconsider our decisions.
This extends to my next tip, which is to pay as you go instead of opening a tab, especially at a nightclub or bar. Rather than turning over your plastic, and dealing with the consequences later, make a point of paying for each item as it is served to you.
This will prevent you from disassociating the services you are receiving from the cost you are tallying up. This can be especially beneficial if you are in a situation where the item served can impair your judgment, and make you more apt to spend frivolously. By removing the crutch that is credit or debit cards, you reduce your ability to slip up in your spending and saving habits.
By developing these habits of saving and spending you will be ready to combat almost any impulse you may have on your next shopping trip. Just remember, the immediate is never as gratifying as the long-term.