You might think, saving $1 in one week is very easy. It is. You take $1 in your wallet and move it to your piggy bank, or $1 on your online checking account and move it to savings. Done. It requires effort, it’s a manual process, but not too hard to do it one time.
What about saving $1 every week? If you’re like me, moving the $1 after five or six weeks you’ll forget. You have to go to the ATM, withdraw money, exchange it for $1 bills, come home and put it in the piggy bank. Or, you have to move money from your online checking account to savings, which is better than driving to the bank and takes less steps. All those extra steps to save means it’s easier to slip up. The temptation is too easy to spend those saved $1’s if you need it.
We have recently started saving for an emergency fund, vacation, and saving for sustainable energy improvements. Here are some steps that keep us focused on saving more money.
Why are you saving?
The stronger your why on saving, the more likely you are to stick to your savings goals. One of main reasons we save is to travel to places we haven’t been. There are many on our list. We want an emergency fund because life is messy. We don’t want our credit cards to increase again. They were painful to pay off. Almost no investment consistently beats the interest rate you pay on credit cards. It’s less stressful to have savings in a pinch than feel the double whammy of putting money on a credit card after an emergency tire blowout or home repair. We are saving for home energy improvements, either to our own house or future rental. Solar panels and home batteries are on that list, after winter’s record cold in Texas and potential blackouts. Every $1 we save gets split 3 ways to the above goals.
Studies have shown it’s easier for people to save when it’s done automatically. Have 1% of your paycheck go to your retirement account. Have $1 of your paycheck pulled into a separate savings account. Pay yourself first.
Create multiple vaults for your savings
If you only have one savings account it’s too easy to say this nice pile of money is earning no interest. It’s okay to spend it. It’s much harder to say that when $500 of that is for your trip to Europe, $3000 is savings for your house down payment, $200 is for the new computer you want to buy, $2000 is for the car repairs, $1000 is for your emergency fund. You have to consciously choose where the money comes from, and it hurts. When it hurts to spend your savings, it means you are further away from your goal. You will slow down and consider if this is the best use of your money. Slowing down spending helps you make better decisions. Create multiple vaults for your savings. Be very specific what the money will be used for and when it will be used. The SoFi app is really good at setting up multiple vaults. You can save, spend, and earn interest—all in one account. Use my link to sign up and you and I will get a $25 bonus. https://www.sofi.com/invite/money?gcp=9d65fa82-0a76-4c89-9d0c-e1fa66b196a0
Have specific goals for each vault
It’s good that you have created vaults. Now make sure you set up a specific goal for each vault. SoFi makes that easy too. By having a specific goal for each vault, your subconscious brain will look for solutions to increase your savings. You will be more motivated to save, seeing the rewards as you get closer to achieving your goal. Use psychology for your own benefit.
Increase your savings over time
If you have been reading this blog for any length of time, or you are new (welcome to both groups!), you’ll know $1 per week in savings won’t go very far. The key is consistency of action every week, every day. Start saving, earn more income, cut your expenses, increase your savings. Make a game out of it. Save $1 a week the first, then next week make it $2. Increase to $3 saved the third week. Keep going until savings becomes slightly uncomfortable.
Do the same for your retirement savings. Start at 1% automatically saved. Then move to 2%. Keep pushing, keep increasing. If you don’t do anything else, have your retirment savings increase 1% when your salary increases every year or when you switch work to a better job. Be diligent, be consistent, be persistent in saving. Soon it will become a habit. Soon it will become enjoyable.
Reward yourself after meeting your savings goal
A former college friend looked at the space between my fingers and said I would earn a lot of money in life, but a lot of it would slip through my fingers too. How true she was. I am not the fastest person to retire, or will I have the most. We realize we are more fortunate than most. I do know, if you set a savings goal and reach it, you should reward yourself. Activate the positive endorphins in your brain for a job well done. After celebrating, set another savings goal and repeat the process.
What’s your best way to save? Share it with us in the comments below.
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