If you have a less than stellar track record of saving money, then you probably expect it to be hard work. It's true—whenever you change habits it's a slow, tough business.
Madison Avenue has convinced us that to live the American Dream, we need a lot of stuff. Even activities as innocuous as kicking back and watching TV after a long day, bombards us every five minutes with advertising showing beautiful people driving beautiful cars and drinking beautiful beer. (Either that or certain drugs that will solve problems we didn't even know we had!)
We want a new car, new shoes, or a jetted spa tub for our bathroom suite attached to our 5000 square foot home. What we need is new tires and a gasket seal, new heels, and a plain old tub with bubble bath. Most of us under 60 have been systematically conditioned from birth to want more, and it has to be bigger and better. Credit has shortened the point of passionate desire from saving for weeks, months, or years to minutes as you complete the Instant Approval credit app that ensures you'll be driving home in a brand new car.
We aspire to live like the models we see. How else to explain this national obsession with celebrity? So most of us succumb to the siren song of easy payments, no interest, no money down. Is it any wonder that collectively we Americans have been spending more and saving less than ever before?
If you have never been able to save money, there's no time like the present to start. If you are behind on your financial goals or have never set any because you never had money left over to save, now is time for a course correction. As you manage to meet a few small goals first, it becomes easier to establish the habit that leads to meeting larger savings goals like saving for a home or retirement.
Lots of us, especially when we're young, attempt to a live a lifestyle before we really have the means. It's also a great way to get yourself into deep doodoo financially. It's a trap, but you can avoid it by taking a couple steps back to think about what is really important to you.
Unlearning bad financial habits takes time, so go slow. If you are in the hole every month spending is little bit more than you earn, it's time to regroup. You can do that only so long before it catches up with you and not in a good way.
More or less concurrently, do two things. Start keeping track of what you spend. Keep a record and log every expenditure. Get receipts for everything. Within a month it becomes a habit. After a couple months you can see exactly what you are spending.
At the same time, start saving change or stashing dollar bills for a specific goal. Put a jar on the washer and dryer and pay for each load of laundry or round up on your checking account. At the end of the month, take the money you've tricked yourself into saving and put it in a a separate account. Put it in an account at a bank other than your usual bank or credit union. You'll be less likely to raid it if it's off the beaten path.
After a couple months you'll have money saved and a better idea of how precisely you spend your paycheck.
Saving money is a habit, but if you can set up a self-reinforcing cycle, just knowing it's possible can be a powerful incentive to up the ante. Instead of saving just the change in your pockets every evening, add a new trick like stashing the money you save by shopping sales. If you use a coupon for $3 bucks at Costco, pay yourself the money. When you meet your goal, you can enjoy it with a clear conscience knowing that there will be no credit card bill in the mail next month.
Knowing where and how you spend your money can be a terrific eye opener. Who'd a thought that your morning latté and weekly paperback book habit could cost you $85 a month? Setting a realistic budget is almost impossible unless you know where your money goes. After two months of diligently recording what you've spent, you can see where those discretionary dollars go.
Cutting expenses is a natural by-product of seeing where your money goes. Save by:
Save the difference to build a cushion that pays in financial and emotional dividends. Small changes in your financial habits can produce huge improvements in your quality of life.
There are dozens of ways to save money. It's hard at first to change habits, but over time the advantages become obvious. Saving a cushion for a rainy day can mean the difference between weathering a temporary setback and regaining your footing or seeing your situation snowball and ultimately declaring bankruptcy, which has become more difficult in recent years.
One of the best ways to save is to buy a home and build equity. With a decent downpayment, you can lower interest rates too. To find out what current mortgage rates are, DiamondPeak Mortgage can help.