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If you want to be motivated to save more money, you need to understand how it can save your life. Your savings can come in handy if you are in the midst of an emergency. When your source of income is compromised, the money that you stashed away will also help you pay for your basic necessities. There are so many things that saving can help you with but unfortunately, not all Americans are able to save as diligently as they should.
Americans love to spend. That is a fact. President George W. Bush even encouraged everyone to spend because 70% of the American economy is driven by consumer spending. While we all know that we need to spend for our basic necessities, it is important for you to know that spending is the number one cause of our inability to save.
According to the real-time clock from Retale.com, $60,882 is being spent every second. That means $3.6 million ($3,652,920) is being spent every minute. In an hour, $219 million ($219,175,200) is being spent. that makes the daily spending a whopping $5.2 billion ($5,260,204,800).
On one side, this spending is good for the economy. When people spend, it means they are confident about their finances. Businesses will profit from this and the employees will all be compensated well. Everyone’s happy, right?
The truth is, spending is not all that bad. We do need to spend for our basic necessities after all. But too much spending becomes dangerous if it keeps you from being able to save more money to reach your goals. And if you used credit to fund that expense, that is a dangerous habit.
Think about it. If something happens that is similar to the 2008 market crash, your lack of savings could put you in another compromising position. And even if the economy holds steady, you are not immune to personal setbacks. You might end up with a very expensive emergency. One trip to the emergency room or a broken heater in the middle of the winter can cost you a couple of hundred or even thousands in one go. If you do not have any savings, you need to consider how you can build it up so you can prepare for these emergencies. One of the consequences of not having adequate savings is incurring a huge amount of debt. That can compromise your financial position and force you to restructure your debt to make it easier to pay it off.
4 ways you can trick yourself to increase your savings
Although it may be hard to save more money because of all the spending that we need to do, there are ways that you can trick yourself into doing it. If you are part of the 50% of Americans who do not even have $100 in their emergency fund (according to the statistics from CreditDonkey.com), you need to reassess the security of your finances. If you cannot even cover an emergency expense that is $100 or less, you know that you are in serious trouble.
But as mentioned, saving is easier said than done. There is just too much temptation to spend. Everywhere you turn, the billboards and advertisements are telling you to spend, spend, spend! That is just how this consumerist society is set up. What could have been put in your savings account can easily be diverted into that cup of coffee or a new accessory?
Fortunately for you, there are techniques that will help you save. Of course, the usual advice about following a budget and having a spending list is still effective. But beyond that, there are 4 other tips that you can follow to help you boost your savings and not think twice about doing it.
Save the change.
The first tip that will help you save more money is to keep all your change. Ideally, you can set a budget for yourself each day. For instance, when you leave the house, put $50 in your wallet. When you come back home, anything left of that $50 should be put aside for your savings. Regardless if that is $5 or $20, put it in your savings account.
Automate your savings.
Technology can help make saving easier. If you find it hard to put aside the change that you have in your pocket each day, you may want to consider automating it. Set it up with your bank or employer so a portion of your income will go to your savings account. When your money is wired to your account, the system will automatically get a portion of the money to send it to your savings account. This is a great way to save more money without realizing it. If what you see in your paycheck is the amount less your savings, you will not really feel the loss of the money you are saving.
Keep your eye on the prize.
We mean this literally. Post a picture of your motivation to save. Most of us have a saving goal. It can be your retirement, sending your children to a good school in college, or that vacation – print out a photo of these goals. Put the photos in your wallet, in your workstation or any place where it is highly visible. This will serve as your reminder to save. When you have a saving goal, it gets easier to put aside the money that will help you reach your goal.
Set a daily saving amount.
This can actually be a weekly or monthly saving goal. You need to set this amount and stick to it – no matter what. For instance, you can commit and save $200 every paycheck – which is twice a month. Just like in your automated savings, as soon as you get your paycheck, you will get $200 and put it in your savings account. Whatever is left – that is the amount you will spend until your next paycheck comes in. When you no longer have cash, you will stop spending. Unless it is a life or death situation, you will not deviate from your goal to save more money.
How to keep your savings intact?
One thing that people fail to realize is that putting aside the money is only half of the battle. You will only win if you succeed in not spending what you saved. Some people save but when they reach a certain amount, they feel so good about their saving accomplishment that they end up spending it.
You need to learn how to say no because it can help you keep your savings intact. Here are three things that you can do to keep yourself from spending your savings prematurely.
Make sure you have an emergency fund.
First of all, you need to separate your savings from your emergency fund. Some people combine their emergency fund with the money they are putting aside for their saving goals. When something bad happens, they end up dipping into their emergency funds. You need to keep these two separate. That way, you will not compromise the success of your saving goals.
Set rules about spending your savings.
If you have to use your savings for something other than your intended goal, you need to define the rules before you use it. According to an article on GetRichSlowly.org, the challenge in using money is knowing when to use or save it. The author of the article gave two hints to help you decide when to use your savings and when to keep your hands off it. The first question is to think about the original intention for the savings. After considering that, you need to think about what is more important, the current situation or reaching your saving goal? This is how you can determine the rules surrounding the use of your savings.
Store it somewhere it is difficult to get.
The final tip that will keep you from spending your savings is to store it where you will have a hard time getting it. Make sure that it is only difficult – and not impossible. For instance, relying on your house as your savings is not the same as putting it in stocks or bonds. If you have to use your savings, it is too complicated to sell your house so you can use the money for your current emergency. At least, this is true if you compare it to liquidating your stock investments. Of course, you do not want to make it too easy – like withdrawing from an ATM card. If you make it too easy to get your savings, you might give in to the temptation to use it up.
If you think that you need a big income to save more money, think again. Here is a video from a woman named Melissa Alexandria. In the video, she is describing how she saved over $30,000 while earning only $2,500 a month. If she can do it, then you definitely can make the sacrifices to save more. Look at the video to see how she did it.
