How to Save Money. Tips That works!

How would you like to become a money-saving machine?

If that’s down your alley then read on friend…read on. If not, this probably isn’t the post for you.

We’ve all heard that saving is important, but many of us don’t do it very well. According to a 2018 article published on Forbes, 40% of Americans couldn’t come up with $400 to pay an emergency expense.

Holy guacamole…

Why is this the case? More importantly, what can we do about it?

In this post, I’d like to touch on a few reasons why it’s difficult for us to save and explore solutions to help you become a money-saving machine.

1) Have Clearly Defined Goals for Your Money

Give your money a job! (i.e. create a budget!)

Have you ever tried to wrangle a clowder of cats (Yes, a clowder…I Googled it!) Well, neither have I, but I have to imagine it’s a lot like trying to manage and save money without a budget.

But what exactly is a budget? A budget is a system for making decisions with your money. It’s how you prioritize what you need and want your money to do for you.

And having a system for prioritizing your spending is a whole lot less stressful than spending willy-nilly and praying that your balance doesn’t reach zero before your next payday.

Related Post: Effective Tips on How to Save Money From Salary.

Listing your priorities (examples)

• Priority 1: Keep me alive! (Allocate money to food, shelter, and other necessities.)
• Priority 2: Keep my future self alive! (Allocate money to savings)
• Priority 3: Travel Home. Allocate money to go see family during the holidays.
• Priority 4: Personal trainer.
• Priority 5: Blah blah blah….

When your priorities are written out like this you can allocate your money to each job.

And notice the order of the priorities above. They may appear to be out of order, but they’re not!

Remember: your priorities are your priorities.

Having money to go see your parents during the holidays may be more important than your gym membership. Or losing that extra 30 pounds may be paramount.

That’s cool. What’s important here is that your budget serves your needs.

And what will also happen at the same time is that since each dollar has a job, they won’t end up being spent on a whim.

This is super important if you want to be able to save more money.

If a Caramel Frappuccino from Starbucks is important to you then, by all means, put it in the budget and enjoy it. But if it doesn’t add much value to your life, then don’t put it in the budget and save the money or use it for something that does add value.

By doing this you’ll notice that all that extra money that got blown when you were bored or impulsive will still be available.

Then save, save, save!!

Creating your priority system and assigning each dollar a job is the first step of turning that feral clowder of cats into a well-trained pack of Siberian Huskies.

Commit (a portion of) your money to you!

We all need to commit at least 10% of our income to ourselves, but most of us don’t do it because of all the things we have to do.

If we paid that portion of our income to ourselves no matter what, we would find our financial position improving. Without a doubt.

That’s all there is to it…short and sweet.

But wait! While the principle can be summed up in a handful of words. We all know that it’s a whole lot easier said than done.

So let’s make it easier to do.

Related Post: Save Money And Reduce Expenses With These Items.

Apply the 10% rule

While 10% is the rule of thumb you’ll hear, you certainly don’t have to start there.

Let’s say you can save 2-3% of your income now. Why not do that? Three percent, while not as good as ten is a whole lot better than zero.

(And hopefully, the section on budgeting can help us free up at least 2-3% of our income for saving.)

And don’t forget, it’s always better to automate the process. If you have your savings automatically transferred into a special account that’s not held with your normal funds (maybe even in a new bank) you’ll be a lot less tempted to dip into it.

Remember: out of sight, out of mind!

Once you start (and automate) the process of committing part of your income to yourself, you can begin the process of searching for ways to increase it from 3% to 10% or beyond!

(In “MONEY Master the Game”, Tony Robbins mentions that one way to increase your savings rate is to dedicate your future salary increases to savings. This will allow you to save more over time without feeling the pain of cutting your expenses.)

2) Have Clearly Defined Goals for Yourself

Know yourself first: 

Another way for us to save more money is to examine our habits to see if we’re using money to achieve non-financial goals.

What do I mean? Well, let me illustrate this with a quick story.

When I got my first professional job (working for the man), I moved to a new city where I had no friends and no family.

In a very short time, I developed a routine.

• Wake up at 7 am and go to work
• Eat lunch in my car and listen to the radio
• Go home after work, eat dinner and watch a movie

After a few months of that, I started to feel like I didn’t have much of a life.

To combat this I began going out to the various malls to walk around and people watch. And going out to the mall inevitably led to spending money (on gas, food, and trinkets).

Many of the things I bought during my outings weren’t necessities or even things I really wanted.

What I really wanted was to feel like I had a life and a purpose. You know – things to do and people to do them with.

The money I spent was trying to fill a void created by a lack of relationships and a social life.

In the end, trying to use a financial tool (i.e. money) to achieve non-financial goals (i.e. to create a social life) put me in a position where I wasn’t just lacking a social life…I also lacked money.

Many people find themselves in a similar situation. They may not be trying to buy a social life. Maybe they’re using money to fortify existing relationships or to find freedom, adventure, security, or whatever.

So the question is: Are you trying to use the money to reach non-financial goals?

If so, what exactly are you trying to buy, and is there a more effective way to get it than by using money?

If you can figure that out you’ll be ahead of the game.

Related Post: Money Saving Challenge to Stockpile Thousands!

Clearly define the things you want

In addition to what we just talked about above, many of us don’t have much money saved because we don’t have a clearly defined reason to save it.

Sounds like a ridiculous statement?

Well…maybe, but think about this: what’s an item that you really want to have someday? Something that you’re really working hard for and see yourself having. A house? A car? A vacation?

Can you describe it? I mean, can you describe it in exact detail?

The average person would be hard-pressed to rattle off the specifics of something they wanted when asked. 

Start by Creating Specifics Details 

For example, the average person wouldn’t say, “I want a 2019 Range Rover Sport SVR with a black exterior, twenty-one-inch rims, a brown interior, leather seats, four-wheel drive, automatic transmission, air conditioning, hands-free Bluetooth integration, a navigation system, and one of those little green tree air fresheners hanging from the rear-view mirror.

Instead, we might just say, “I want a Range Rover”.

See the difference? Specificity creates a clear image. And clearly defined mental images are more compelling than vague notions.

It’s important to clearly define our future goals because clear mental images of your goals can pull you through today’s distractions and help keep you on course to reach those goals.

To create a clear image you need to write it down. Write it down, picture it, and know that you will achieve it.

Related Post: Creative Ways to Save Money.

Wrap-Up

In this post, we discussed two steps for turning yourself into a money-saving machine this year.

• Setting goals for your money by budgeting and initially committing a small portion of your income to savings.
• Recognizing when you’re using the money for non-financial objectives and clearly defining your future goals.

While these aren’t earth-shattering revelations, I hope they provide some value in your journey to accomplishing your financial goals.

Cheers,