Want to start saving money like a pro? Boost your savings by adopting these twelve habits of successful savers.
I am so excited to share with you my first guest post from my blogging friend Mrs. Five Senses at Five Senses of Living. Her goal is to help the everyday person live a richer and fuller life. She doesn’t believe that you have to be a millionaire to live a million dollar life! With her blog, she shows you how to live well on a five-figure budget.
When deciding it’s time to start saving money people begin searching for different ways to make this happen. Some start looking for that magic ticket that’s supposed to lead them straight to wealth and happiness. Others realize it’s a good time to start eliminating waste, debt, and unnecessary items.
While everyone’s journey to “success” is a bit different there’s one thing that all successful people have in common and that is good habits.
The best way to establish good life habits is by taking a moment and really looking at your life.
Do you have a money mindset? Have you established habits that will further your life goals? To reach the place you want to be financially you have to have to build your mindset around how you are going to get there.
If you are ready to take control of your own money and live a life of financial freedom these money saving habits are a great place to start.
1. Live Within Your Means
This is where everything begins. It’s the root of all good financial habits. In fact, if you can’t figure out how to live within your means then there really is no point in trying to set financial goals.
To “live within your means” means that you spend less than or at least equal to the amount of money you bring in each month.
If you want to live within your means, you have to know what your means actually are. So before we move on take a moment to figure out where you stand in your own financial story.
Are you spending more than you make each month? Or are you able to stash a little bit of extra money into savings each month? If you’re able to stash a little each month you are on the right track!
2. Set SMART money goals
If you want to reach your long-term financial goals, you first have to identify what they are and then have an idea of how much money you’ll need to reach them. SMART financial goals are really helpful for this. SMART goals are Specific, Measurable, Attainable, Realistic, and Timely.
If you don’t create a specific plan along with achievable goals, it will be much harder to get to where you want to be. With SMART goals you are creating an action plan to accomplish the things you want.
Are you familiar with setting financial goals? Think about both your short-term and long-term needs and set yourself up with something that works for you.
For example, have you thought about saving money in a retirement account or an emergency fund? By saving money in one of these accounts you are protecting yourself from risky financial situations in the future.
3. Have A Plan For Your Money
The most successful people in life understand the importance of planning, especially when it comes to money. Create a plan for your money and do everything you can to stick to it. You can’t manage and make a plan for your finances if you haven’t taken the time to prioritize where it should go.
By creating a spending plan you are able to prioritize the things that are important to you and develop a strategy of how your money should be spent.
4. Automate Your Finances
One of the reasons people find it difficult to save money is because they don’t have a process in place to make it happen. By automating your finances you are taking the thought out of saving money. Those who don’t automate their savings are much more likely to reach the end of the month and realize they’ve spent everything that they had planned to save.
So once you figure out how much you’d like to save each month, set up direct deposit to automatically send that money into savings. Diverting cash to a savings account forces you to save money before you even have a chance to spend it.
If you aren’t familiar with automatic bill pay and how it works there’s no better time than now to figure it out. Take a moment to login to your banking website and set up automatic payments. By having your bills set up on recurring payment cycles you can relax knowing that your bills are being paid on their due date.
5. Consistently Track Spending Habits
Tracking your expenses can really help you save a ton of money. One of the most important things you can do when trying to get your personal finances under control is to figure out WHERE all of your money is going each month.
Keeping track of spending is something that nearly everyone can benefit from. It really doesn’t take much for someone to get off track and begin overspending if they aren’t familiar with tracking their expenses. Having an idea of what’s coming in and out of your account lets you see the big picture of your finances.
There are several good budgeting programs that can help you take charge of your finances. We use a free money management tool that helps us to track our savings and investments and also make updates to our financial accounts when things get out of balance.
- Spending Logs: A Complete Guide
- How to Create a Spending Log in Your Bullet Journal
- The Complete Guide to the Cash Envelope System
6. Make A Habit Out Of Paying Yourself First
Just reading the statement “pay yourself first” might seem a little confusing at first glance. When I first heard some financial guru talking about this I thought to myself, “But I’m not self-employed. How am I going to pay myself?”
Don’t make this one confusing. The phrase simply means paying into your own savings before paying expenses or any other budgeted costs.
Saving shouldn’t be something you only think about once rent is paid, bills have been covered and groceries have been purchased. Instead, saving should come first. And yes, this is actually possible.
Allocate a certain percent, or even a certain dollar amount, to come out of your check each pay period before you even see it. Without you even noticing it, the money is transferred to a “pay yourself first” account. Automatic transfer is one of the simplest ways to save money and build wealth effortlessly.
You can pay yourself first by depositing money into:
- Pay into your retirement accounts, such as your employer-sponsored 401(k), Traditional IRA, or Roth IRA.
- Build your emergency savings account
- Feed your vacation fund
- Pay into your HSA (Health Savings Account)
Do you pay yourself first, or do you spend money first? If you aren’t a “pay yourself first” kind of person give it a shot and you may be surprised to see how exciting it is to watch your bank account grow.
Start small. Once you start saving and building momentum, it gets easier and easier.
7. Make Your Money Work For You
By setting up a money saving system to passively work behind the scenes you are allowing your money to work for you. You can even automate it where you set it and forget it!
It helps to have a specific set of goals that you are saving for and investing in since it will help focus your spending and give you motivation. Think about the things that you need to pay for like your child’s education, purchasing a home, or early retirement.
In order to increase your wealth, you need to invest money in products that will give you a good return on your investment. Create a system that is focused on long-term benefits. Building wealth takes time, you cannot afford to let a significant amount of your money sit in low-interest savings accounts.
8. Set Up Contributions To Retirement
Enroll in your company 401(k) plan if you have one, and make an automatic payroll contribution with each paycheck. Start small if you need to – you probably won’t even notice a big difference in your take-home pay.
Pro tip: Make sure you are putting in enough money to your 401K that you receive your employer match. This means that the dollar amount you put into your retirement will be matched by your company up to a certain percentage.
9. Pay More Than The Minimum On Your Credit Cards
Make a habit from here on out to never put anything on your credit card if you can’t pay off the entire balance in the same month. Far too many people find themselves in credit debt because of their bad spending habits.
And speaking of credit cards, if you want to become financially stable, you will need to get rid of those balances. If you haven’t been successful in paying off your credit cards in the past, then you should commit to paying more than the minimum payment due.
Pay attention to those credit card statements. At the bottom of many statements they will often tell you how long it will take to pay off your balance if you only pay the minimum payment, and how long it will take if you pay a fixed amount slightly higher than the minimum payment. Most of the time, there’s a difference of several years!
10. Negotiate Your Bills
It’s a little-known fact that you can negotiate many of your bills. With a bit of research, motivation, and some determination, you can contact the various companies that you do business with and negotiate a lower rate.
Here is a list of services that you can try to negotiate:
- Internet service
- Cell phone and home phone service
- Credit card companies
- Car insurance
11. Learn to Say “No” to Yourself
This is a really important one. I almost rate this one with as much importance as living within your means. If you aren’t able to tell yourself “no” then it’s going to be really hard for you to gain control of your finances. Saying no is about controlling the impulses when you are shopping, or just out and about.
Making just 20 impulse purchases per month at an average of “only” $5, adds up to $100 spent on stuff you really don’t need. That’s $100 which isn’t going into savings or investments, or to paying down debt.
One trick I’ve used on myself is the “72 Hour Rule”. If I really think I need to buy something I wait 72 hours before I purchase it.
After 3 days I have a better idea if I really need it or if it was just something I wanted (and really don’t need at all).
12. Don’t Try To Keep Up With The Jones
Have you ever heard of lifestyle inflation? What about keeping up with the Joneses? I’m sure most of you have heard of the latter at some point in your lives. Lifestyle inflation can be the enemy of wealth building.
Trying to keep up with someone else’s lifestyle is not only stressful but it will get you into financial trouble and lessen your ability to reach financial independence.
By beginning to implement some of these habits you will see that you are able to impact your financial situation in a positive way. Don’t get in over your head. Start slow and stay motivated. Little by little you will begin to notice that the changes you make are helping to grow your savings.
What habits have you adopted that help you stash away a little cash each month?