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We all do it, tell ourselves those little lies to justify our purchases, then wonder why saving money is so hard and where all the money went at the end of the month. I used to tell myself each of these lies, spending all of my hard-earned money, thinking it I would still have enough to save. Instead, I always found myself wondering where it all went. It was especially frustratingbecause, when I calculated my earnings and weighed them against my payments, everything added up. I should’ve been saving easily, but that’s not what happened.
If you tell yourself any of these lies, and expect to save money, just stop. Stop believing the lies and justifications you come up with and practice some of these suggested action steps instead. I promise, from personal experience, how you're currently spending your money isn't helping you in the long run. So get honest with yourself, and shed some light on the money messages you're letting in.
If you have enough money to go around, you don’t need to stick to a rigid budget and track your purchases, right?? Sorry, but you still have to track them. At least loosely. If you have some semblance of self-awareness with where the funds are going, you'll have a better idea of ways to save. That self-awareness can also be used to spend less in areas you're overindulging in.
ACTION STEP: Download a receipt tracker app or link your accounts to apps like Penny or other budgeting ones that will give you a place to quickly review where your funds are going.
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Chances are, even if you’re determined to leave money over to put in savings later, it probably won’t happen. If you really want to save, it’s best to do it right off the bat by paying yourself first, and then giving your money to the big box retailers and whomever else!
ACTION STEP: As soon as you get paid, put some of that money in savings. Better yet, see if your employer will let you divert a portion of your paycheck directly into savings. Out of sight out of mind!This way you won’t have the option to overspend. And if you absolutely need to, you can take that money back out of savings again later.
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Realize when times are good that it definitely won’t always be this way.Sorry to burst your spend happy bubble.Actually, when times are good, that's the time to cushion your emergency fund and savings plans! The unexpected will eventually come up, don't let it take you by surprise. Just as in life, it’s never wise to become too confident with your money situation. This attitude may come back to bite you.
ACTION STEP: Think back on historically “good times” of the year for you financially. Examples may include your birthday, end of year bonuses, holidays, etc. Anytime where you can pretty much guess you'll get a little windfall of money. Instead of planning on spending all that cash on bottle service at the club or a new wardrobe, divert a percentage of it to your emergency fund or savings plans right away, then plan for some fun with the other portion.
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Guess what's going to make you even more stressed in the long run? Not checking those accounts. If you don’t know what’s in your account, you can put yourself into a lot of financial danger. Not only because you’re ignorant of your remaining balance, but because someone else could be ripping you off. Nothing like finding out someone has been charging up a storm on your credit card. No one is going to care more about your finances than you.
ACTION STEP: Get in the habit of checkingall of your accounts every day or weekly (I would recommend daily though!). Sometimes it's a one-off mistake like you'll get double charged, a server will enter the wrong tip amount, other times it could be several charges from a fraudster who got your information. Either way, better to catch it quick and resolve immediately.
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Sometimes they creep up unexpectedly. Just like it’s easy to lose track of where money is going, it’s easy to lose track of where time is going too. Admit it, every month that rent date seems like it comes out of nowhere, and way too soon. And have you ever had that moment of sheer panic when you suddenly wonder if you missed a payment (or birthday or work due date or any other crucial day for that matter?) Always be thinking about those big purchases and how you can budget for them.
ACTION STEPS: Breaking this into two parts: recurring (like rent) and one off big purchases (like new furniture):
Recurring: Keep a calendar of scheduled payment dates and check it often. Setting reminders or alarms to go off a few days beforehand helps a lot too.
One Off's: Figure out how much you're going to need and when you would like to make the purchase. For example, I need $6,000 for new furniture in 6 months. Great! So that works out to about $1,000 a month I am going to put into a savings account. This is now a fixed expense for me the next six months as I am saving.*Keep in mind, that these “savings” are different from your emergency fund.
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…and your morning coffee run is a #haveto.Just like big purchases, little ones matter too, probably even more in some ways. When the living is easy, coffee runs and other minor purchases seem like no sweat. Until you sit down and realize that's $500 per month you've spent on lunches, coffees, and snacks during the work week. And maybe you can even afford them, but make sure you're aware that's where the money is going in case an emergency does come up and you need to find that “spare change” in your spending. Mindless spending usually leads to loads of trouble.
ACTION STEP: Stop using cash for these items and instead use a debit or credit card. From there, I am going to bring it back full circle and to number one's action step and remind you to download an app like Penny or some other one to help you see and understand where you're money is going. Or else, again, check those accounts daily so you can actually see where those little purchases are going.
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As a last note, don’t give yourself the guilt trip if you’re doing any or all of these things. Everyone does them. Just be more conscious of them, and your savings account will thank you.
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