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How to Trick Yourself Into Saving Money

When we were kids, we were probably advised we should save some of our income in our piggy banks for something special in the future.  As adults, we all know we should be saving money for emergencies, for large future goals and for retirement. But this a classic example of “easier said than done”. By the time we get done paying all our bills and spending a little on the fun things in life, we find that we are always running out of money before we run out of days in the months. So how can we find ways to save more? By purposely tricking yourself using some of these ideas:  

Trick #1: Automate Your Savings

One of the best ways to save your money is to not force yourself to make the deposits each month. It is too easy to find reasons not to save the amount you know you are supposed to. Take willpower out of the picture by setting up an automatic transfer from your checking account to wherever you want to save – a savings account, an IRA retirement account, college 529 account, etc. Every pay period, on the day after your paycheck is deposited, your bank can automatically pull over a lump sum of your choosing without any interaction needed. Even better, have money taken out of your paycheck for your 401k savings, your HSA savings and even send money right into your emergency fund from your paycheck.

You may completely forget that you are even saving money, meaning there’s much less temptation to spend it. Ideally, you forget it’s even there until you look one day and to your surprise you find you have built an impressive balance in your account.   

Trick #2: Name Your Savings Accounts

Don’t underestimate the power of giving your money a name or meaning. Setting up sub-accounts for specific savings goals can 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: John and Jane’s Savings Account or John and Jane’s 30th Anniversary Trip Account? Directly connecting your goal with your savings can help deter you from wanting to tap into that account.

Trick #3: Find a Personal Budget Software App

You likely don’t have the time (or desire) to sit down and track your spending manually. But with today’s software apps, there are plenty of personal budgeting apps that can sync your accounts, track your spending in real-time and automatically develop a budget to help you save. Giving a visual overview of your spending and saving habits can be a real eyeopener, making it easier to understand how much you’re really spending and where you have opportunities to save.

Trick #4: Divert Payments

When you finish paying off a loan like a car, student debt, or finally clear that credit card balance, you will find yourself with extra money each month. If your money manages you, it will run off and do just what it wants, and that is an opportunity wasted. 

However, if you are in charge of your money, you can choose to use that new money each month to further your future. Take the money you were previously spending on these payments or subscriptions, and set up automatic payments to a savings or retirement account as described in Trick #1. Or add the money to payments on the remaining debt payments you have.

Trick #5: Don’t Spend Your Pay Raise

This one 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 merit increase of 3%. Instead of increasing your monthly spending by 3% because your paycheck is bigger, consider saving some and spending some. For example, increase your 401k contribution by 1%, increase your contribution to your savings by 1% and keep the rest to spend on yourself. This allows you to enjoy a modest boost in both your monthly spending and increases your savings as well.  

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. And when a large unexpected expense comes along, like a car or house repair, you can breathe a sigh of relief knowing you have the funds to pay for it and the ability to pay yourself and not the credit card company back.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor.  Tel: (910) FEE-ONLY.  Synergy Financial Planning may offer investment advisory services in the State of Connecticut and in other jurisdictions where exempted.

Investing involves substantial risk and has the potential for partial or complete loss of funds invested. Investments mentioned may not be suitable for all investors. Before investing in any investment product, potential investors should consult their financial or tax advisor, accountant, or attorney with regard to their specific situation.