Until pretty recently, I would have classified myself as a saver. To be honest, it was probably wishful thinking. I was able to save money, so that meant I was a natural saver, right?
After a weekend trip with some friends who are saving pros, I realized that I’m not a great saver. They tracked deals, had zero interest in small impulse purchases while out, and knew their budget down to the nickel.
I don’t track a budget and I don’t have a running tally in my head of how much things cost or how much I’ve spent in a given week or month.
I’ve been mistakenly thinking that I’m a great saver, but what I realized is that I’ve learned how to save, despite being a spender by nature. I tried to pinpoint exactly what made me feel like saving came easily to me and realized this: I save because over the years I’ve set up a series of nudges to help me succeed.
None of these nudges are huge actions or changes that leave me feeling deprived. They’re better than that. They’re the small, little things that I’ve put in place to help me make the right decisions day to day about how to spend and save my money. Below are the nudges that have worked for me, but use these examples to create your own nudges that make choosing to save easy and non-restrictive.
Put yourself on autopay
We’ve all likely heard that you should pay yourself first: the idea is that as soon as you get paid, you put away money into your saving and investment accounts before you pay for anything else. It’s great, in theory. But let’s say you just got paid and while you know that you should transfer $500 to savings, you’ve also got that weekend away next weekend and you want to leave a little extra in your checking account, just in case. You decide that you’ll make the transfer once you come back from that weekend.
Spoiler: this was me and I never made the transfer later.
To combat this, pay yourself first on autopay. Set up an automatic transfer from your checking account to your savings as soon as your paycheck hits your account (and don’t forget to take advantage of any employer retirement plan contributions that you can make automatically as well!).
Since having this set-up, I haven’t missed a month of hitting my savings goal.
Create a barrier
This may seem like an incredibly small thing to do, but it has made a huge impact in keeping me from overspending: I keep my checking account at one bank and my savings account at another.
This barrier keeps my savings account out of sight and out of mind. It also keeps me from accessing the savings account funds too easily: if I need a little extra cash, I can’t easily transfer it from savings to checking – it takes 2-3 days!
Know your spending triggers
Spending triggers can be people, situations, or stores (hi, Target), that seem to just make you take out your wallet and buy everything. My trigger was stress shopping after work. On my commute home I’d drive past a Nordstrom Rack and after a long, stressful day I’d find myself automatically pulling into the parking lot and roaming the aisles for 45 minutes looking for deals. Once I realized that stress was my spending trigger, I looked for ways to distract myself from the temptation to stress spend. I changed my route home from work and found other, less expensive things to do to help me relieve stress.
Once you know your spending triggers you can easily put up actions to avoid them.
Master the pause
I adopted this technique after reading “The Life Changing Magic of Tidying Up” by Marie Kondo. In the book, she suggests holding things up and asking, “does it bring me joy?”
Now before I’m about to buy anything – anything – I pause and ask myself, “will going to this spin class make me happier than [insert the other thing I’d like to buy or save for].” Pausing and asking the question helps me to reflect on whether I’m making a mindless purchase or whether that $20 shirt from Target really does bring me joy.
Set exciting goals
A trip to South Africa had been on my travel wish list for 10 years. When I moved from California to London one of the first things I realized was that I was 12 hours closer to South Africa. I wanted to make my dream destination a reality while living here. Though I was closer to the destination, the actual trip, including a safari, was not going to be cheap.
Having this exciting goal helped teach me how really kick up my savings efforts. I started saving money I didn’t even realize I was spending. Would I rather call an uber or take the bus and put the money toward my trip? Was grabbing that green juice more important than seeing a lion up close and personal?
Having an exciting goal that was top of mind helped me to view all of my purchases, even the small ones, as tradeoffs. It taught me that not only can I save, I can be great at saving. If I had set an indiscriminate goal to just “save more” there is no way I would have saved as much as I did.
Embrace digital solutions
I’m a big fan of using digital solutions to make everything in life easier: to order a cab, to call a handyman, and to even get my apartment cleaned. So why not use an app to help me become more of a saver?
There are plenty of apps that will help make saving easier, but don’t depend on them to do all the saving for you. I like to think of apps as the icing on the cake: I’ve already saved my automatic amount, but when I layer on an extra incentive day to day to not spend, I’m thrilled.
One of my favorite apps that I’m using right now to help save a little extra is Qapital. They have a lot of different functions you can use to save, like rounding up each purchase to save the spare change or setting weekly spending targets.
Play the 1% game
My absolute favorite class in business school was behavioral economics. During this class we learned about different nudges that we can put in place to save us from sabotaging our financial future. One nudge, from Nobel Laureate Richard Thaler is called auto-escalation: an automatic option to systematically increase your retirement plan contributions by 1% each year.
I took this concept to my personal life and started implementing my own auto-escalation. With the automatic transfer to savings that I set up for the beginning of each month, every few months I would increase it by 1% or so. It turns out, I didn’t even miss that money. Over the past few years of this auto-escalation, my husband and I have been able to double the amount that we save each month.