Saving money is a habit that is difficult to build. It may be second nature to some, but for others saving could be a pain.
It’s something that gets started for a few days or weeks, then soon as it starts to grow, we suddenly find use for cash.
We need to break that destructive habit and replace it with good financial habits instead. Let’s look at some ways on how we can build the habit of saving money.
Learn How to Save Money and Build Wealth with these Steps
Set SMART goals
Goals should be SMART: Specific, Measurable, Attainable, Realistic and Time-bound. Say you want to save $5000 from January 1 to December 30 2015. Is that specific? Yes. Measurable? Definitely. Attainable and realistic? We hope so. Time-bound? Yep!
Don’t make savings automatic (yet)
Making your savings automatic may work but it doesn’t mean that you have built a saving habit.
Building a habit requires active effort in modifying a behavior. Automatic savings involve none of that. So if you want to build the habit of saving, force yourself to go to the bank every pay day and deposit 10% of you paycheck to a separate account. Do that consistently twice a month and the seeds of habit will be planted, a part of your life that you can’t live without.
Survive the first 66 days
According to a research by Professor Jane Wardle and Dr. Phillippa Lally of University College London, it takes 66 days on average (approximately 2 months) for people to acquire a habit. When you repeat a behavior consistently in the same situation or stimuli, it will eventually require less thought and become an automatic response.
Now do the actual thing: every day for 66 days, put a dollar in a money jar upon arriving at home. Arriving at home should be the trigger of your habit; don’t wait for 5 minutes before putting the dollar in your money jar.
You’re not allowed to dip into that money jar for the next 66 days. The habit should take root and if it does, take it to the next level by keeping 10% of your paycheck in a separate savings account every time you receive it.
Increase your “psychological wallet*”
Your leather wallet may be fat and bulky but your psychological wallet might be starving and can accommodate only a few hundred dollars. The problem with some of us is that we think too small in terms of saving money. We pick an item to buy, save for it, buy it as soon as possible and poof — we’re back to square one. Time to upsize that tiny psychological wallet.
*Psychological wallet” was popularized by motivational speaker and writer, Bro. Bo Sanchez
Know your money personality
Are you aware of your money personality? Are you a saver, a spender, a security seeker or a risk taker? If you are a saver, then good for you, the saving habit runs in your blood. If you are a spender, then trouble might be ahead. Being aware of your money personality may help you balance your saving and spending habits.
Take a money saving challenge
Have you ever heard of the 52-week money saving challenge? It works this way: you start with a certain amount, maybe $1, then choose a certain amount which you will add every week for 52 weeks.
For example, if you start with $1 on week 1, you are supposed to save $2 on week 2, $3 on week 3, $4 on week 4 and so on . As you can see, the savings rate is compounding. You did not just save $4 in one month, you saved a total of $10.
Done for 52 weeks, your total savings would be $1378. And it all started with a dollar!
Money challenges are great way to save money because as individuals we love challenges, especially achievable ones. And the best thing about achieving a goal? You will like yourself and believe in yourself more, which makes you want to take on more difficult goals.
Give yourself a pat on the back, a brand new item from your wish list, or order a dinner without looking at the right side of the menu. You deserve it because you’ve paid the price since day one. Rewards make you feel good because, well, you want them in the first place; besides, they are your tokens of appreciation for yourself. Rewards are forms of positive conditioning. When you attach a reward to a certain goal, you’d want to achieve that goal to deserve the reward.