Quick: Based on your personality and habits, are you a saver or a spender?
Statistics prove that most of us want to be the former – but in reality, the majority are the latter.
Check out these stats: According to NerdWallet.com, “15” is one mighty popular number.
- 15 = percentage of US families who carry credit card debt that equals more than 40% of their yearly income
- $15,000 = average amount of credit card debt per American household
- 15 million = number of people this year who will empty their savings to pay medical bills
- 15 = percentage of disposable income that will be spent paying off credit card bills
For lots of people, spending has gotten out of hand; they wake up and think, “Ugh, how did I get here?” For others, it's a job layoff, divorce, mounting medical bills, and/or something that was seemingly out of their control. But for all scenarios, this same inner dialogue seems to be stuck on auto-play: “This lack of savings doesn't feel good. I want and need stronger financial security.”
Buckle up. Get clear, and make a commitment.
We've all heard the Suze Ormonds, Jean Chatzkys, and other “experts” say the same thing: First, pay off the credit card with the highest interest rate. Then, tackle the credit card with the second-highest interest rate. Knowing and doing are two separate things, but this – you already know.
First – you have to decide.
Decide to become a saver. Or decide to become a better saver. It's 100% comparable to someone who is committing to lose weight or get through college or conquer any other goal.
Step 1: Adjust your head.
Step 2: Get a workable, step-by-step system in place.
Step 3: Gain one or two new habits by doing something 21 times – until it becomes a habit.
Consider These Tips for Growing Your Savings Account:
1. Team up.
You may be a victim of circumstance, or you may have simply made lots of small but not-so-healthy decisions. Taking the family vaca when you couldn't afford it? Bad choice. Paying for a medical treatment that was necessary? Of course, you had to do what you had to do. But now's the time to tackle this and join forces.
Enlist a financial planner, a life coach, a friend or mentor, your partner, and/or even your children. Being accountable to someone else will increase your chances of success at learning how to become a saver.
2. Log it. Every time.
Set up an app, folder on your desktop, a literal paper journal, or something that you know will be handy and easy to access. Write down every dime you spend. Every single solitary dime. What will quickly happen is that you'll start to think, “Wait, do I want to have to write down $4 for this latte? Or $60 for this piece of clothing? Or $27 for this online purchase that I know I don't really need?”
Write. Write. Write. Record. Record. Record. And watch how your habits quickly begin changing. No cheating. No rationalizing. No excuses. Every dime gets recorded.
3. Cut 'em up.
You need two credit cards. Find the best offers, and stick to one (and only one) that you will manage and pay in full every month. The second one is for emergency purposes only, or for when there is a glitch in the system and you can't use the first one. The goal is to never touch them. Ever.
When you're learning how to save more, credit cards have no business in your life. Your debit card is the one for you. All the store credit cards? Get rid of them. Get out the scissors – right now.
4. Hey, you're not Fido!
If you've not been a good saver, odds are high that you reward yourself with “treats.” We've all done it. But here's the thing: stop. Reward yourself differently. List down some ideas that feel good to you that don't involve money. Yes, there are many! Instead of lunch out with the girls, go for the walk-and-babble time.
Inside scoop: Many people who are working hard to become savers actually lose a few pounds. The reason? They are training their brains to be aware of “excess.” Excess meals out, excess snacks, excess reasons to “splurge” or “live a little.” There could be a win-win here, yeah? Read on!
5. Take inventory.
Keep it simple. Write down or put into a spreadsheet your fixed monthly expenses. Include an authentic estimate of gas and groceries, as well, because these are necessities. Subtract this total amount from the money that you're bringing in, and then prepare to get real.
If it's time to take on some freelance work? Do it. If it's time to seek a part-time extra job? Do it. If it's time to team up with friends to swap child care, time to stop with the extra meals out, time to cut back on the extras? Do it. Buck up.
6. Start with small gains.
Check in with your cable company, and get that bill down. Don't take no for an answer. Cable, internet, and phone? Yearly premiums for life insurance, home or renters' insurance, car insurance? Check in with your providers. It's a sure bet that you can shave off a couple of hundred dollars each month by going line-item by line-item.
Everything from garbage removal to snow plow or lawn care or number of haircuts – find ways to dent those monthly amounts. Treat it as a little competition, and have some fun with it. Call and state that you're working to reduce your bills and that you're considering going with another provider. It's the truth, and the odds are in your favor that you'll hang up with more money in your pocket. The key – that money is NOT yours to spend. It's now yours to put in the bank. No cheating.
7. Check in with HR at work.
Schedule a sit-down. Do you have fixed monthly prescriptions for which you pay? Yearly eye exams and getting new glasses or contacts? Do you pay for some over-the-counter meds like Tylenol or cough syrup when you're sick? These expenses should all come right out of your flex spend account. If you have flex spend available to you – for the love of all things money – use it! This is an untapped source for your savings account.
Some folks still pay-out-of-pocket for these things all year long and don't tap into their flex account until December. If you submit all the receipts at once and then get your money back in December, you'll have a nice little nut to put directly into savings.
8. Start small, but be 100% committed.
Conditioning is key: Maybe it's a jar on your bureau, and you commit to putting $1.00 in it every, single, solitary day. Maybe it's a $25.00 auto deduction from your checking account to your savings account – every two weeks – bam! It goes into the savings account. Maybe it's $500/month that you put into a separate account, and you “pay” that as you would any other bill. Pay yourself first, and the money will go in there.
This can sound impossible, but hey, as Nelson Mandela once said, “It always seems impossible – until it's done.” There are so many great resources available online with even more tips and strategies.
9. Get humble.
Figure this out. Sell some unused stuff on eBay or Craigslist, and jump-start the process. Once you get the “high” of savings, it outweighs the high of buying a new thing or outfit. Involve the family; get a chart going, and keep the conversations live about how to “save more this month.”
Coming Full Circle: The key is just to decide.
What was that movie that said, “Build it, and they will come”? Field of Dreams. Remember that one? Decide to save, and the savings will come. Take it one step at a time, and set a goal. Remember the active verbs: decide, cut, record, and watch. Good luck – and watch that savings account grow!
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written by: Valerie J. Wilson
Valerie J. Wilson is a freelance writer who enjoys writing about finance, social awareness, and eduction.
