Nobody ever said that saving money is easy.
All of us leave a daily spending trail. Rarely, do we analyze the financial impact, positive or negative, of simple things like eating out (usually overeating), utilizing smartphone food delivery apps and bringing lunch to work every day (which also can have a positive impact on personal health!)
Actions to save money are habits and just like anything we find a challenge, it takes time for a habit to forge into a discipline. Personal philosophies about saving vs. spending are a deep-seated cognitive soup formed early in childhood and molded over the years based on perceptions and experiences.
Here are 4 simple ideas you can use to gain more money in your pocket:
1) Savers think backwards, always with a financially beneficial endgame in mind.
They have evolved to consider the cumulative impact of monthly payments on their bottom line, which is not common nature for the masses. They internalize the opportunity cost of every large or recurring expenditure.
Savers weigh the outcome of every significant purchase, especially discretionary items, which invariably increases their hesitancy spend. This manner of thought provides breathing room to deliberate less expensive alternatives and thoroughly investigate the pros and cons of their decisions.
A focus is on the opportunity costs of using credit and paying interest (resources that could have been otherwise directed into investments earmarked for long-term goals like retirement).
2) Savers experience enriching lives, but always with an eye on the future.
Savers don’t live small lives -a big misnomer. I think people are quick to spread this type of narrative to ease personal guilt or envy. Certainly, a fiscal discomfort mindset is part of who they are when they believe personal financial boundaries are breached.
However, savers thrive below their means. Extending themselves with new cars and big mortgages is uncomfortable and inhibits quality of life. Super-savers are not compelled to spend to gain social status and not motivated by keeping up appearances.
Savers are programmed to pay themselves before everything else. They proactively adjust their household expenditures so that company retirement and or emergency savings accounts are funded first. Payroll deductions or some form of automatic deposit feature make it easy to create and stick with an aggressive saving and investment program.
Make an initial bold move. A financial leap of faith: Look to immediately increase your retirement payroll deduction to 15%. Don’t even think about it, just do it. Before consideration to your household spending.
Micro-track expenses for the month after the new deduction is in effect. Adjust spending to meet the new, increased deduction. Then work on the necessary cuts to expenses to continue the 15% or possibly adjust even higher, to 20%.
My thought is you’ll be amazed to see how quickly the change is accepted and the impact minimal to the quality of life. Only as I’ve witnessed how this action alters thinking to attach good feelings and reward to savings vs. spending.
3) Savers are a year late but rarely a dollar short.
No, they don’t own the latest smart-phones, nor do they consider automobiles as luxuries. They’re merely for transport.
The savers I work with are at least one or two smart-phone iterations behind (it works fine) and will investigate pre-owned autos over new. They’ll maintain and keep these automobiles for as long as they’re operational, well into hundreds of thousands of miles.
4) Savers understand their spending weaknesses and seek to correct them.
If I ask on the spot to tell me about your spending weakness, I know it’s on the tip of your tongue. We all can recite what our pitfalls are with money. It doesn’t take a formal plan or analysis for an individual to know where they’re blowing the budget. Savers are aware of their vulnerabilities, make peace with them, and work to change negative behaviors.
Here’s segment one of several with Tiffany Craig at KHOU on 3 easy steps to save money:
Lance Roberts is a Chief Portfolio Strategist/Economist for Clarity Financial. He is also the host of “The Lance Roberts Podcast” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report“. Follow Lance on Facebook, Twitter, Linked-In and YouTube