Until pretty recently, I would have classified myself as a saver. I had some money saved, so that meant I was a natural saver, right? But after a weekend trip with some friends who are saving pros, I realized that I’m actually 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 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 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 small, little routines that help me make the right decisions 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 ways to save money that make choosing to save easy and non-restrictive.
Use autopay to put money into saving and investments
You probably already know that you should pay yourself first, meaning you put away money into saving and investment accounts before paying for anything else. Sounds great in theory, right? But let’s say you just got a paycheck, and while you know that you should transfer $500 to savings, you’ve also got that vacation coming up and want to leave a little extra in your checking account just in case, so you’ll add $500 to your savings when you get back. Spoiler alert: This was consistently me, and I never made the transfer later.
To make sure money is actually going into your savings or investments, use autopay so you don’t have to make a decision. 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). I haven’t missed a month of hitting my savings goal since setting it up automatically.
Create a barrier
One of the biggest factors that has helped me save money is that I keep my checking account at one bank and my savings account at another. This may seem like an incredibly small thing to do and maybe even seem inconvenient or unnecessary, but it has made a huge impact in keeping me from overspending. Having a barrier between my two accounts and two different “types” of money (one for my present self and one for my future self) 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 want a little extra cash, it’s not easy to transfer it from savings to checking—it takes 2-3 days, and by that time, I’ve decided against taking from savings anyway.
Know your spending triggers
Self-awareness is always key, and getting to know what triggers you to spend is crucial to avoiding spending more than you’re comfortable with. Spending triggers can be people, situations, or stores (looking at you, Target) that make it difficult for you to stay within a budget. For example, 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 destress that didn’t involve my wallet. 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 identify how to fix them or avoid putting yourself in that situation.
Master the pause
This is not a tip just for your finances but can be applied to your whole life, and it’s just about being more mindful and intentional about every decision you make. I first got the idea to be more intentional from Marie Kondo. The idea to organize (and keep vs. donate) based off of what sparks joy really resonated with me: Why couldn’t the same principle be applied to personal finance as well? Now, before I’m about to buy anything (and I mean anything), I pause and ask myself, “Will this make me happier than [insert the other thing I’d like to buy or save for]?” Pausing and asking the question helps me reflect on whether or not I’m making a mindless purchase or if that $20 shirt from Target really does bring me joy. I’ve saved myself from a lot of mindless purchases that didn’t actually make me happier, and I saved my money for purchases that truly are worth it.
Set exciting goals
A trip to South Africa had been on my travel wish list for 10 years, but a trip across the globe was not going to be cheap. Having a goal that truly excited me taught me how to prioritize savings. I started saving money I didn’t even realize I was spending (like would I rather call an Uber or take the bus and put the money toward my trip?). Having a goal that excited me every time I thought about it made saving money so much easier than just thinking I should have savings or focusing on retirement alone. I viewed all of my purchases as tradeoffs, which taught me that not only can I save, but I can also 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.
I’m a big fan of using technology to make everything in life easier: for transportation, to call a handyman, and to order food. 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 I layer on an additional routine to save change that I don’t notice in the moment but adds up in the long run. One of my favorite apps is Qapital for functions like rounding up each purchase to save the spare change, or setting weekly spending targets.
Increase by 1 percent
During a behavioral economics class in business school, I learned about routines that help prevent individuals from sabotaging their financial future. One routine that particularly stood out to me was auto-escalation, or an automatic option to systematically increase your retirement plan contributions by 1 percent 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 percent. Spoiler: I didn’t even miss that money. Over the past few years of trying this technique, I’ve been able to double the amount saved each month without feeling like I’m missing any spending money.