It may come as a shock you but I use to be 100% in the spender camp. I just felt like I didn’t know how to save money! I was ashamed of how I always ended up spending it until my favorite finance gal, Shanna Skidmore, explained spender vs. saver in a way that I had never heard before.
Shanna said that savers save money to feel confident and good about their finances and spenders SPEND money to show that their finances are doing ok. I had never considered that but it was definitely true for me. Like, if I could purchase this expensive thing then I must be doing ok with my finances.
But the truth is that I know I need to save money too and having money in the bank for things makes me feel better. So I set out to see what I needed to do to become someone who could save money.
How to save money tip #1: Reduce visibility
If the money appears available for spending, I will spend it. How about you? This is the habit we get into where we check out bank balance, see some money in there and then spend money that should be saved for something else.
Enter You Need A Budget. I know I mention this app/software a lot but guys, it’s changed my finances! YNAB is all about syncing up your bank account and then putting the money into budget categories. Ok, sounds basic right? But the secret sauce is that you then look ONLY at the app, not your bank account balance when looking to see if you “have money”. Your mindset goes from “do I have money?” to “Do I have money set for that?” And that is the game changer!
If you haven’t hopped on the YNAB gravy train yet you can get 34 days free with this link (and I get free months too if you sign up)
By changing what you see, you then hack all those biological triggers that keep you from saving money (remember those? We talked about them here). When you see what you truly have to spend it prevents you from overspending because it doesn’t appear available.
Tip #2: Separate spending account
Despite how freaking awesome I know that YNAB is, I became all too good at rearranging money to accommodate my spending whims. So, enter phase 2 of my plan . I set up a separate checking account and budget in YNAB that only accounts for my flexible spending budget items.
Let me break down how I make this work. I have one checking account for all the monthly bills. And then another checking account for the items that I have more “flex” in how I spend. For me, these categories include: groceries, gas, “fun money”, dining out, family fun and dog food.
Then by keeping the budgets separate in YNAB (you’ll see when I mean when you check out the app) I only view either the spending OR the bills area never both. This way I don’t have the option to move money around as easily.
Tip #3: Saving for things that matter to me
I don’t know about you but I HATE those lists of things you “should” be saving for. Those lists never seem to account for other priorities in your life, like fun. Yes, I want to save for retirement but I also want to go on vacation and get my haircut at a nice salon. I want to be able to save for gifts to buy my hubby on our anniversary AND have savings for car maintenance.
Finding the balance of the things I want to save for and the things I should save for took some trial and error. The important thing is to line up your savings with the things that really matter to you. If you care enough about something you’ll be more likely to make the savings happen.
If you haven’t checked out the free Savings Success guide I’m offering it has a whole section on how to prioritize your savings goals – click this link below to get it straight to your email!
Tip #4: Automate, automate, automate
Again, the less effort the more successful your savings plan will be. I set my retirement contribution up and it increases automatically by 1% every quarter. That may not seem like a lot but it means that I don’t miss it either. It also means that I’m slowly adjusting to have less and less in my paycheck as more is getting invested for retirement.
For my monthly spending goals I know exactly how much I should save every month. First the bills get funded, then savings, then whatever is left over is spending money and I have to make it work. And you know what? It does seem to work out somehow, each and every month. Each payday I transfer that week’s spending allowance into the spending account and that’s what we get. We don’t even look at the rest of the money and that means that the goals get met!
Tip #5: Use pay increases to increase savings
Whenever my husband or I gets a raise we split the difference between savings and general spending money. 50% goes automatically into savings (usually retirement right now) and then the other 50% we can use for whatever we want.
This gives us the feeling of still having a bit more money in our pockets but also know that we increased our savings too without taking a hit. It’s win-win!
How to save money – this is just the beginning!
There are so many great tips and savings hacks that you can use to really become the saver you have always dreamed of. Seriously, I used to feel like I was a failure because I couldn’t seem to save. Now that I finally figured it out, I feel so much more confident in myself.
Take advantage of my free Savings Success guide – just click the pic below to get your free copy today!