Are you a spending monster who wished you were a saving technician? Or do you want to know how to teach your kids to become a saver rather than a spender? If you answered yes to either (or you are just so bored anything will do this minute), the article is for you.
Confession of the “ah ha” Money Saving Moment
I have to confess that I didn’t discover this secret until I was sitting in front of my computer with nothing to write about. I was staring at that white screen at the time and was actually thinking about golf. One thing led to another and when my mind wandered upon why I wanted to play so badly, it dawned on me that it was because of my good performance of late. My desire for golf was heightened by the success I was having. I wanted to feel good and golfing gave me that feeling. I was a recipient of positive influence.
Positive Influence in Becoming a Snowball Saver
Like a snowball rolling down a slope, positive influence can help give us a jump start along the path to prosperity. I still remember my first savings account and seeing my tiny account balance grow. The numbers were increasing at a snail pace, but they were definitely going up.
It was fun to see all those charts that trend upwards as I recall. I was young, but I already saw the benefits of saving. As the activity section was filled with transactions, I started associating the happiness to saving money. Not eating that candy bar the other kids had all of a sudden became okay. When I grew up, so did seeing all my friends buy high priced TVs without getting one myself.
Incorporating Positive Influence Into Your Daily Habits
If you are already a saver, then you agree that saving can be a source of happiness. If you are a spender though, then most of the usual advice of saving money won’t work because you just don’t see the benefit.
And don’t get me wrong. I know saving money is hard work, and I’m a saver by nature. Even if you try to save, it’s not uncommon to get to the end of the month with nothing left. And those funds you have sitting in that traditional savings account? Don’t expect them to grow astronomically, because interest rates are at an all-time low. If you are having trouble saving, then try to incorporate these money moves that will trick you into stashing away your hard-earned funds before you know it.
1. Establish a Envelope System
Stop swiping and start using cash. To implement the envelope system, you’ll need to come up with a plan for your money and allocate it to the appropriate envelope.
Say, for example, your monthly budget allots $200 for groceries, $50 for entertainment, and $100 for savings. You’ll need to stash those amounts away in envelopes as soon as the funds hit your hand. Once the money’s gone from the envelopes, you have to wait until the next pay period to access additional funds.
2. Use Automatic Deposits to Your Advantage
Not disciplined enough to follow the envelope system? Visit your payroll office to automatically have a certain amount from each check deposited into an alternative account. It’s best to go with an online account that’s not easily accessible to eliminate the urge to make withdrawals. The more steps it takes to withdraw money, the better.
3. Save Your Raises
Received a pay raise recently? Kudos to you, but don’t run off and accumulate more expenses – especially if you’ve lived comfortably on your existing income. Instead, save the excess income and watch how quickly it grows. A pay increase shouldn’t automatically equate to a lifestyle change, especially if you’re having a difficult time saving money. Even the smallest amounts, such as $20 each week, can add up rather quickly.
4. Stash Away Windfalls
How about those irregular sources of income, such as work bonuses and income tax refunds, that sometimes provide a slight boost to your cushion? Instead of blowing the money on expensive gadgets or a shopping spree, deposit it into an interest-earning account. But if you have a more demanding obligation that needs your attention, don’t hesitate to use your windfall wisely.
5. Keep The Change
Each time you spend money, set the change aside, and watch it grow. Once the month ends, tally up all your deposits from both your checking account (which can be kept on a spreadsheet) and your Ziploc bags. The amount you’ve accumulated may surprise you. Another note: this should be done after you’ve stashed away your set amount each pay period just in case your variable expenditures for the month are much lower than expected.
6. Pay Debts That No Longer Exist
While you may be a bit confused by the title, following this tip is a no-brainer. Once you’ve finally paid off those credit cards or auto loans, continue making payments as if you still owe on them. Instead of paying your lender though, put the payments into your bank account. This will help you quickly boost your savings rather than find other things to spend money on.
7. Build an Emergency Fund with a Savings Account
Start small, but start saving. Forget about investment accounts and any investments that may go down. Open an online savings account. Put some money in there, and start seeing that money grow.
8. Reward Yourself When You Make Milestones
Set some goals and as you reach them, give yourself a small reward. It could be a nice dinner with your loved ones or new golf clubs. Whatever it is, make sure to spend within your means.
9. Check Those Stats
Look at that account balance periodically. Let your family know how much money you saved since you started making an effort to increase your financial resources. You will feel good about the progress, and that in turn will help you save more.
The Hardest Part of All
Congratulations, because you already accomplished the toughest part of all this – finding out about it. Now all you have to do is start. Once that snowball begins to roll, it will just continue rolling and rolling.
Aside: Positive influence works extremely well with paying off debt too. That’s why the debt snowball method works even though you might actually be paying more in interest. Here is more information on what the debt snowball is.
{ read the comments below or add one }
Great article and great tips to help people save. The tip of continuing to make a payment after the debt was paid off was a new one. It does make sense to pretend you still have the payment and just set that money aside in a savings account. Otherwise, it could be easy to use that money on something else.
The best part is that if you never had the money, you won’t ever miss it!
I remember when I was a young man, I had a large glass jar about 2 1/2 or 3 foot high with a small opening on the top [ like a large wins bottle ] and every day I would throw in all my spare loose change. By the time it was full , I had Mega $$$. No, I did NOT spend it, I put it into a separate savings account. As I said in the past, I often also worked another side job, 4 hours a day for 5 days a week in order to accumulate more MONEY. If not 5 days, why not 2 or 3 days a week? There are numerous opportunities in life where IF you have money, you can take advantage of it and buy Dirt Cheap. Stock market crash, I buy when others are selling. Life is GOOD!!
Moonlighting is awesome if you can find a way to make money in addition to your full time job. And good for you to buy stocks when others are selling. I bet you made a ton of money lately!
No, I am still waiting for the Major Crash which is on the horizon. The problem is that the Fed dropped the interest rates to 0 and they are creating TRILLIONS of dollars out of thin air to bail out Wall Street and the Banksters and to prop up the market. So that stopped the crash / temporarily. I expect the market [ Dow ] to drop down to about 15,000 or less. This CRASH will be worse than the Crash of 2000 and 2008.
I hope you make lots of money but at the same time, I hope there won’t be a huge crash!
I classify unexpected money as #6. One other tip I try is to pay for my home, utilities, and insurance using only one of my semi-weekly paychecks so one of my checks are almost pure savings. I know many people do not have their lives set up so their rent or mortgage costs less than 50%, much less with utilities and insurance. However, if you start your month paying off as much as possible, you will save more off your second check.
You are golden with a 50% savings rate. Remember to add automation to your savings plan and you will be all set when it’s retirement time. Good job!
Back in 1950, I enlisted in the Navy for 4 years. We earned about $ 120.00 a month. Of course, they provided all the meals, housing, and medical. I had them automatically deduct $18.75 a month for a 10 year [ $25.00 ] savings bond. At the end of 4 years, it cost me $ 900.00. After 10 years I received $1200.00. To find out what rate of inflation we had between 1951 and 2020, go to USInflationcalculator.com and put in $18.75, the year 1951 and the year 2020 and you will see that we had 886 % inflation….. that $ 18.75 would now be $184.90 a month.
$ 185.00 a month X12 months = $2220.00 a year. Multiply that $2220.00 X a 45-year work life you would have saved $99,900.00. With “cautious ” investing, it could easily be worth $700,000.00+. By the way, $185.00 savings a month is chump change. You should save at least 10%+ in order to live comfortably in the last 20 + years of your life.
Arminius Aurelius
Thanks for chiming in Arminius. Your stories are always motivating, and it’s good to hear from someone who’ve actually lived long enough to benefit from compound interest.
Save early and often people. It works!
Another great article. I especially liked # 6 in regards to a car loan. If you keep paying yourself the same amount of what you were paying on the loan, by the time you need a new car you’ll already have the money. Then you can choose whether it’s better to pay for it outright or finance it in case they are offering 0% financing. In that case your money will continue to work for you and not them. This is all part of my be your own banker philosophy
I like that one too Steven. Another reason having cash to buy a car outright even if car dealerships are advertising 0% financing is that not everyone is going to qualify for the 0% rate. The way the car buying process works is that the financing department is the last step in the process, which means that by the time you know what rate you qualify for, you already invested at least a couple hours into thinking that the new car you test drove is yours.
By having cash, you won’t get into a situation where they tell you the rate you qualify for is really 5% instead of 0% a few hours in, making that car you wanted unaffordable because you can always switch to buying the car without financing.
I don’t like the tip about checking the account balances periodically because it goes against the benefit of automated savings.
I agree with the other poster – set it and forget it!
It’s a balance, Michelle. Check too much and you’ll feel compelled to take money out. Check too little and you’ll never get to see the fruits of your labor.
If you have to choose though, I agree that you have to err on the side of not checking. At least that way you are still saving lots!
Automation is the real deal. Set it and forget it and by the time you check your accounts, you’ll be rich!
Nice article, this definitely a positive influence for me to continue to save.
I too have thought about this. We must be inherently something, whether it’s a spender or a saver but the good news is, people can change. I used to be a spender (not a big one, but a spender nonetheless) but I’d say I was a saver now, just a few months after deciding to change.
Coming up with a non-financial reward would really be great. I’m nearly debt-free and having a hard time not deciding to reward myself with one of the several things on my “want” list. I haven’t figured out what that non-financial reward would be, but I’m working on it.
My savings began when I didn’t have money to buy something I wanted, and then began to save up for it. this was when I was younger and still use the same philosophy for the majority of my purchases. I agree that having a positive influence is key, also setting goals is a great reminder to help stay motivated and to mentally know there is a reward at the end of the tunnel.
Nice post sir.
I have found that if I focus on the end goal – financial, diet, whatever, I can get frustrated very easily. Instead, I try to act in a way that will get me closer to my goal – in daily increments. In other words, if I have a spending problem, I’ll make a plan, just for today, not to waste any money going out to lunch (for example) and if I achieve that, one day at a time, I can feel like I had a successful day. If instead I think about some harder to achieve goal – like having a net worth of $5 million in 3 years, I may give up and not do what I need to do on a daily basis.
Seeing both my emergency fund and general savings account grow (hehe, by even small increments) is definitely a positive influence for me to continue to save.
Good explanation of this phenomenon.
This is exactly why each of my children started receiving a (very small) allowance starting on their 7th birthdays, why we went to the bank that same week and opened a custodial timed-saving account complete with pass book, why they were taught to enter each monthly deposit of their allowance, and why, for the first year of receiving an allowance they were not allowed to make any purchases. The whole point was to help them develop, at the very least, a habit of saving money though my hope was that they would develop a strong taste for watching their money grow. It was my theory that they would, in the natural course of events, learn to spend money but it was my job as their parent to teach them the whys and hows of saving.
Great article, we recently started having our flexible spending money direct deposited into our savings. We had already spent the money so why not just save it and earn interest instead of pumping it back into the checking account.