How do I start saving for my retirement, future purchases, social events, charities, cars, etc… and this list can go on and on. This topic seems to come up on a consistent basis during regular conversation as well as during coaching sessions. Learning to save for most people is very difficult for a number of reasons. One of the more common reasons is: “I want my kids to live a better life than I had”, and because of this we get our kids whatever they want. This constant drive to provide for them will keep us broke if it isn’t properly planned for, and it’s a very easy trap to fall into. I mean, who doesn’t want better for their kids than they had growing up? It’s perfectly OK to desire a better lifestyle for our kids and ourselves, just don’t let this desire ruin your financial well-being. The only way to avoid this is to be intentional with our finances and create healthy money habits. Here are some proven saving methods:
- Save your lunch money (or coffee money). Most of us go out to lunch with our co-workers a couple times a week or possibly purchase lunch in the work cafeteria (if you’re back in the office). During 2020 this one was a bit more difficult to see because most of us were home, but with everything opening back up it is now very relevant again. Let’s do some simple math:
Say you go out to eat 5 days a week and spend $8 (For many lunch can be closer to $10, but for this example I’m staying on the more conservative side). That’s $40 a week, and when multiplied by 50 weeks you get $2000. Let’s say you cut this back to 1 day a week to treat yourself. Doing this one thing will create a savings of $1600! That’s enough for a nice family vacation OR a partially funded IRA retirement fund. How cool is that!! - Create a shopping list. This can save money on impulse purchases, and works great as long as you stick to your list. Creating a meal plan works well when building out your shopping list. Using a list does a couple of things:
a. It makes you think about what you need from the store before you go.
b. It provides you guidance as you navigate your way through the store to help keep you focused on your planned purchases. - Save your tips and / or change: This one is a little more old school unless you actually have a job where you come home with tip money or pay for items with physical cash. Most people today use a card (debit or credit) and forgo the old school physical cash method. This suggestion will take a bit more discipline than the first 2 because it will require you to actually pay for some items with cash instead of using your card. When we use cash instead of a card we have what I like to call “a moment” because of the endorphins released in our brains as the cash leaves our hands. This happens because of a couple reasons:
a. We physically see our cash in our hands
b. We know how long it took us to earn that cash
c. We understand that the cash coming back will be much smaller than what left our hands
All 3 of these things together cause us to have this “moment” as the cash leaves our hands to never return. It’s because of this reason we are less likely to spend extra money on items when we are paying with actual money instead of a card. If we can do this for some time you will find that your budget will reflect this as well. The change received back from cash purchases can be placed in a jar and become your additional savings.
I have heard success stories for all of the items mentioned above, and have used the last two. I don’t buy coffee outside of my house unless we are on a road trip, and I rarely go out to lunch which is why I personally haven’t used number 1. The last one mentioned I personally used when I was a pizza delivery driver when in college. By utilizing method three and saving all my tip money I was able to purchase an engagement ring for my wife of 23 years!!
We would love to hear from you! If you have tried any of the above mentioned saving strategies OR one that isn’t mentioned leave a comment and let us know how it went.
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