Nine ways to kick start sav­ings

Herald on Sunday - - BUSINESS - Diana Cle­ment @DianaCle­ment

Carry a notebook with you to write down ev­ery cent you spend or use a spend­ing-track­ing app.

What stops you sav­ing?

Most peo­ple say they don’t earn enough, but more of­ten the prob­lem is fail­ing to tick ba­sic per­sonal fi­nance boxes such as track­ing ex­penses and bud­get­ing and fool­ing your­self in sub­tle ways.

Sav­ing comes from within, not from your em­ployer, part­ner or the Gov­ern­ment.

It re­quires you to think dif­fer­ently. Peo­ple are mo­ti­vated to change in dif­fer­ent ways, but to turn your mon­ey­man­age­ment pat­tern from spend­ing to sav­ing you need to do sev­eral of the fol­low­ing:

1 Learn to de­ter­mine needs from wants

Ques­tion ev­ery item, down to the choice of bread you buy.

Ask your­self ev­ery time you buy any­thing if your pri­or­ity is to save, or to spend. My mantra is: “Do I RE­ALLY need it?”.

2 Pay your­self first

Put away the money you want to save at the be­gin­ning of your pay cy­cle then look for ways to live with what re­mains — and don’t reach for the credit card.

Set up an au­to­matic pay­ment to trans­fer your sav­ings each month.

“Your sav­ings need to be on au­topi­lot,” says Tom Hart­mann from the Com­mis­sion for Fi­nan­cial Ca­pa­bil­ity.

3 Set up sys­tems

This can be split­ting your bank­ing into mul­ti­ple ac­counts ear­marked for dif­fer­ent pur­poses.

It can be us­ing bud­get or spend­ing apps, or a good old-fash­ioned di­ary.

Give your­self rules, such as the 30-day rule where when you’re over­come with the urge to splurge, you di­ary the pur­chase for 30 days’ time.

By then you of­ten no longer “need” what­ever it was.

4 Want to save

Many peo­ple talk about want­ing to save, but the de­sire to spend is greater.

Find a goal and stick a pic­ture of it to the back of your toi­let door or use it as your com­puter or phone screen saver. If you re­ally truly want some­thing in life, there’s a good chance you’ll get it.

5 Doc­u­ment your spend­ing pat­terns

Carry a notebook with you to write down ev­ery cent you spend or use a spend­ing-track­ing app.

At the end of the month cat­e­gorise all your spend­ing and ask your­self how sat­is­fy­ing each cat­e­gory has been.

A $4 cof­fee may feel good at the time — but when you see $120 has gone on hot drinks in a month you might think dif­fer­ently.

If you don’t have a bud­get, use this ex­er­cise as the start­ing point for what you want to spend in dif­fer­ent cat­e­gories.

6 Game your­self

If you are in­clined to buy a cof­fee or other low-value item, come up with a scheme where you trans­fer the same amount or a fixed per­cent­age to a sav­ings ac­count ev­ery time you weaken and spend un­nec­es­sar­ily, says Hart­mann.

Watch it build up and re­flect on the money you wasted to get that sav­ings fig­ure.

Or find other ways to game your­self into sav­ing, such as giv­ing your­self a per­cent­age of your sav­ings as spend­ing money each month.

The more you save the more you are al­lowed to spend, although make sure you have an over­all bud­get.

7 Mix it up

Come up with un­ex­pected ideas to mix it up. That might be an ar­bi­trary num­ber, says Hart­mann, such as your year of birth.

“Make that your sav­ings goal and keep it there as a buf­fer.”

Throw in other ran­dom tar­gets such as your age and put that money aside each pay pe­riod. This helps you learn to save for sav­ing’s sake, not just to buy big items, says Hart­mann. Or go zero waste, which will stop you buy­ing all man­ner of un­nec­es­sary stuff.

8 Pay cash

Pay your sav­ings fig­ure to your­self and all your fixed bills such as util­i­ties and rent/mort­gage on pay day.

Do a ba­sics-only shop on that day that ex­cludes pack­age items and treats. With­draw the re­main­ing money as cash and split it into en­velopes for nonessen­tials such as go­ing out, lux­ury gro­ceries, clothes and so on. Once it’s gone, you need to wait un­til next pay­day. A week, fort­night or month isn’t long.

9 Ques­tion every­thing

There is an aw­ful lot of re­ceived wis­dom that holds us back. It could be lit­tle state­ments that we take for granted.

“You have to spend to save.”

“It’s im­pos­si­ble to buy a house.” “Ki­wis earn too lit­tle.”

“My chil­dren need iPads.”

And so on. Some­one who re­ally wants to save is go­ing to ques­tion all these as­sump­tions and find ways to over­come them whether you earn min­i­mum wage or a CEO’s salary.

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