Relationships are complicated. But I’d argue there’s one relationship that is as complex as it comes: our relationship with money. Having a healthy relationship with money takes introspection and practice, and part of the money journey that we often struggle with is saving.
Use code BLACKFRIDAY for free jewelry with every purchase. Because ethically sourced diamonds really are a girl's best friend.
Simply put, savings is the money not spent after you cover all your monthly expenses (i.e., rent, utilities, debt payments, credit card bills, etc.) that you put aside and save or invest. While saving money sounds monotonous and boring, there are a lot of benefits. The act of saving money doesn’t sound sexy, especially when you could spend your money on the latest trends, travel, or time out with friends. But the end result of financial safety, future security, and a cushion to soften the blow of a financial emergency, now that’s something to swoon over.
According to a Bankrate report in January 2022, less than half of U.S. households, about 4 out of 10, said they were equipped to cover an unexpected $1,000 expense. This statistic is alarming. If many financial experts recommend saving three to six months of expenses, but many people can’t cover a $1,000 unexpected expense, how do we find the disconnect so we don’t find ourselves in an unpleasant financial situation? It all starts with our behaviors. How we think about money is important, but words without action mean nothing. That’s why I’m going to dig into what behaviors can help you increase your savings account and increase your financial security.
Which Behavior Can Help Increase Savings?
If the sheer thought of increasing savings sends you into a tailspin, I promise, it’s not as insurmountable as it may feel. Even if you’re in the camp of wondering how to save money when living paycheck to paycheck, you can do it too. Here are four behaviors to get you started.
Schedule a Recurring Money Check-in
To start saving money, you need to get clear about what you have. Set a regular date on the calendar to check in with your finances. It can be every month or every time you get paid, but either way, put it on the calendar. During this check-in, take a good look at your bank accounts, spending, upcoming bills, and the amount you have leftover to save or invest. While it may feel uncomfortable at first and like you’d rather stick your head in the sand than face your finances, you need to get comfortable and honest with your financial situation. I suggest adding a little fun by cooking yourself a nice meal, getting takeout, putting on a face mask, or grabbing a glass of wine before you get into it.
Pay Yourself First
A mindset shift that has served me well on my saving journey is treating saving like a necessary expense. What I mean by this is just like you have to pay your electric bill or your mortgage, you have to pay into your savings. I make sure I have money to pay into my “savings bill” each month by paying myself first. Before any money goes to my needs and wants, I contribute to my 401(k) and savings account. I’m less likely to spend if I don’t see the money in my account. Find a number that feels comfortable to get started and slowly increase it over time.
Automate Savings
If you make it easier to save, you’ll be more likely to do it. Just like you can automate the withdrawal of money to pay your bills, automate your savings to help you on your money journey. If you already contribute to a retirement account, like a 401(k) or 403(b), congratulations, you’re already doing it! The goal is to make saving as easy as possible so you can see your money grow without the headache and hassle of determining how much to contribute and when. In addition to retirement contributions, you can set up direct deposits from your paycheck into a savings account or schedule withdrawals or transfers from your bank into a savings or investing account. Pretty soon, saving will become second nature, and you’ll get to watch your money grow.
Hit Pause When Purchasing
In order to save, that inherently means not spending. But as it’s not realistic to completely stop spending because we have to make purchases to live, it’s time to get more mindful about spending. The next time you add an item to your cart or get into line to check out, pause and really evaluate if you’re spending money in a way that feels valuable and meaningful to you. If you are, great! But if you’re hesitant, think about whether that money would be better spent building your emergency fund, savings for an upcoming trip, or contributing to your retirement account. Getting in the habit of mindful spending will help ensure you’re spending money on the things you care about and not on the things you don’t.
How To Grow Your Savings
Once you adjust your habits and behaviors around money, you’ll start to feel more financially confident and secure. To grow your savings even further, here are four tips for growing your savings.
Keep Track of Your Money
To see the money in your savings grow, you need to know where your money is going and how much you have available to contribute. The best way to do this is to create a budget. There are a lot of great apps out there that will help you do this, like Mint and YNAB. Or, if you love a good spreadsheet like I do, you can manually track your spending and saving. No matter what you choose, make your budgeting process a part of your regular money check-in to help you reach your financial goals.
Separate Your Needs from Wants
It’s time to get honest with yourself for a minute. Do you really need those new shoes, or do you just want them because they’re cute and on-trend? To save money, we need to get real with ourselves and get clear on separating our needs, like food and transportation, from our wants, like travel and new clothes. If you tend to splurge and treat yourself, remember to use the pause button before you purchase. This can keep unnecessary charges off your credit card and increase your savings.
Downgrade Services
According to a 2022 survey, 42% of people are paying for a subscription they no longer use. If that sounds like you, it’s time to do some major financial housekeeping. Take a good look at your budget and what you’re paying for that can be downgraded or even completely cut. Are you paying for a monthly streaming, clothing, gym membership, or nice-to-have subscription that you no longer need? If yes, it’s time to cancel. If you’re not ready to part ways just yet, see if there’s the option to downgrade your membership or service plan. If you can downgrade and you find you’re still not using it in a few months, make the call to cancel.
Cut Down on Unnecessary Expenses
If saving is your current priority, you need to reevaluate your current habits and spending patterns to see if they support your financial goals. By taking a good look at your finances, you might find that you need to shift your spending and savings habits to better align with your needs. This often includes cutting back on unnecessary expenses. Is $75 better spent on getting takeout delivered to your door or accruing interest in your high-yield savings account? Be intentional about where your money goes. Saying yes to one thing, like a new subscription or pair of sunglasses, means saying no to something else, contributing to your future retirement on a beach with a tiki drink in hand.