How to Trick Yourself Into Saving Money
The stats don’t lie - many of us have trouble saving. Approximately 40 percent of people would not be able to cover an unexpected $400 expense without either selling something or borrowing money.1 While that number is actually an improvement from 50 percent of adults in 2013, it still shows that saving where we can won’t hurt anything. But the problem is, spending is easier (and often more gratifying in the short term). While I see these issues with nurses and healthcare techs more, many of these same tricks work well for those that have high income... looking at you ARNPs, PA-Cs, and Doctors.
Trick #1: Automate Your Savings
Have you ever heard "Pay Yourself First?" One of the best ways to save your money is to forget it’s even there. Take willpower out of the picture by setting up an automatic transfer from your checking account to wherever - savings, a retirement account, etc. After every paycheck is deposited, your bank can automatically pull over a lump sum of your choosing without any interaction needed. After a while, you may completely forget that you’re even saving money, meaning there’s much less temptation to spend it instead.
Trick #2: Track Your Spending
You may not have the time (or desire) to sit down and actually budget your spending. True budgeting with apps like YNAB mean you give every dollar a job and if you overspend you have to manually adjust and account for which other job that money is coming from. True budgeting can be tedious work on a daily basis. If that sounds like too much, I strongly recommend you at least track your spending. Apps like Mint track your spending in real-time and even with some missed categorizations, the process can be eye-opening. This makes it easier to understand how much you’re really spending and where you have opportunities to save. Subscriptions, eating out, delivery services, and cute clothes for our kids are known weaknesses of many. Amazon and Target drivers certainly know our house!
Trick #3: Name Your Savings Accounts
Full budgeting is too much work, but tracking your spending made you aware of a weakness. Try the modern envelope method. Set up an account for that weakness and give your money a name/meaning. This account is our eating out account, when the account is out of money you aren't allowed to eat out until it replenishes. Setting up subaccounts for specific goals can also be effective, especially if you rename each account to the goal you’re saving for. Think about it, which would be harder to take money out of? Savings or 10 Year Anniversary Trip? Directly connecting your goal with your savings can help deter you and your spouse from wanting to tap into that account.
Trick #4: Divert Payments & Snowball
An important part of building up your savings may include canceling unused memberships or subscriptions, cutting the cable cord or paying off loans like car payments, student debt, etc. But the truth is, if you’re not diverting that now “unclaimed” portion of your paycheck into savings, you’re just as likely to spend it elsewhere. Find out just how much you were previously spending on these payments or subscriptions, and instead set up automatic payments to a savings or retirement account, or stick that money in an envelope to build up your cash emergency fund. When paying off debt we often call this the snowball effect, each debt that is paid off you have even more money to pay towards the next debt and eventually start saving/investing more than you ever imagined.
Trick #5: Don’t Spend Your Pay Raise
This one can definitely feel hard to do, but it can be another great “out of sight out of mind” trick to use if you’re able to afford it. Say you’re living on what you’re already making, but receive a bump in your salary of 3 percent. Instead of increasing your monthly spending because you can, consider diverting a portion of it into a savings or retirement account. For example, you could incorporate a certain amount, say 2 percent of the 3 percent raise, into building up your monthly budget, but automatically roll over the other 2 percent into a separate savings account. This allows you to enjoy a modest boost in both your monthly spending and your savings.
Saving money can feel like such an impossible task to do, especially when the temptation to spend has gotten so high. But using these tips and tricks, you and your family can work toward automating your savings, developing healthy money habits and seeing your money grow. Even if you have a really high income as an MD, building good money habits will really make a difference throughout your lifetime.
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