Sure, we all want to save more money, but it can be really difficult. It seems like we get paid one day, and the money’s almost gone the next.
I’m here to tell you that the reason you’re not saving more money isn’t because you don’t make enough. And it’s not because you don’t understand money or budgeting. There’s nothing wrong with you. Here’s the deal:
You’re not saving for something specific.
Huh? You probably think that you ARE saving for something specific.
You’re saving for a house, a car, a vacation in Italy, those killer heels, an iPhone, Kindle books, your cousin’s wedding, your wedding, a spa day, a diamond collar for your dog, your friend’s birthday bash, a new wardrobe, a trip to the moon…
But that’s the problem. You’re not saving for something; you’re saving for everything.
If you have a long list of things you want to buy, your subconscious mind thinks you’ll need an astronomical sum of money. Really, add up the total cost all your wants. It’s probably tens or hundreds of thousands of dollars.
When our minds are scattered on too many things, we’ll never feel like we’re making any progress with our savings. You’ll start to think that buying a latte doesn’t matter because it’s only $5. You’ll think that an armload of thrift store bargains is a good deal because it’s only $30.
I know you’ve heard it before, but those little purchases add up…and they’re preventing you from setting and reaching a savings goal.
Before we continue, I want to point out that the following steps should be used after you’ve already established automatic savings for your retirement. However you choose to do it (401K, IRA), just get it set up so you can stop worrying about it. Ready? Let’s move on.
Here are some steps to get you to start (and continue) saving money.
Choose a very specific goal.
I know you have a million goals, but to get you into a savings mindset just start with 1 goal. For example, let’s say you want to go to New York City. Think about the time of year, where you’ll stay, what attractions you’ll visit, and what it will feel like to walk through Times Square.
Use your imagination. Can you smell the pretzels on the street corner? Can you hear the honking taxis? Can you see the twinkling lights? Good. Now that you have a focused goal, you’re ready for the next step.
Determine the amount of money to save for every part of the goal.
The goal “vacation in New York” is a little vague. Is this a $500 weekend trip or a massive $5000 week-long extravaganza? And can I come with you?
Break down the goal into every aspect of the trip. What is the cost of the hotel, plane flights, rental car, taxis, tips, your meals for each day, admission to the museums/shows/attractions, souvenirs, etc? Don’t forget to pad your budget for unexpected costs.
Now you’ll have a large total cost for your specific goal made up of many of smaller costs.
Display your goal prominently.
Your task is to keep this 1 specific goal top of mind so you can start saving money. Tape a picture of the Statue of Liberty to your credit card. Change your ringtone to “New York, New York” or “Empire State of Mind.” Update your computer’s desktop image with the logo of your favorite New York sports team.
The next time you want to buy something (let’s say a $20 T shirt), you’ll compare that cost to part of your goal. Twenty dollars might not seem like much now, but that $20 is your admission to the Metropolitan Museum of Art.
It’ll become second nature—do you want those $150 jeans or do you want to stay an extra night in the hotel?
Whenever you stop yourself from purchasing something impulsively because you thought about your ultimate goal, transfer that amount of money into your savings account. If you’re a Type A like me, cross off the corresponding cost on your goal budget sheet.
Ah, now you’re making progress!
When you save enough money for your goal, reward yourself and actually experience whatever it is. Then choose your next goal!
Need help with your first goal? Try something less expensive like a $50 pair of shoes. Once you achieve a small savings goal, you’ll have momentum to try saving for something larger (snowball effect, baby). Or make a bracket to narrow down your choices.
Still not convinced you can do it? How about starting with an emergency fund? Research what it would cost if your car needed new tires, if you needed a root canal, or if your dog needed emergency stomach surgery. Those things can’t wait—and sometimes we can use fear to our advantage, in this case, to motivate us to save money.
Are you saving for something specific? What’s your best savings advice?