What to Do When You’re Bad at Saving Money
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Some people are just really bad at saving money. And when we say “some people” we mean pretty much everyone. Spending money? Most of us could probably add that to our resume. But, saving? It’s a topic of struggle for most families, especially since the pandemic began.
Many believe as long as they have money in their savings account, then they’re good at saving. But, we really like You Need a Budget’s approach. They say to give every dollar a J-O-B. That means you’re treating most of your savings account as if it’s already been spent.
Wouldn’t it be nice to receive a bill and immediately see in your budget that the money is already there, without dipping into your grocery or rent money for the month? We all have a list of bills or purchases we expect to make every year. So, make a list and add them into your budget. Estimate what the bill will cost and then budget your savings accordingly throughout the year. Here are some examples:
- Do you pay your home or car insurance every 6 months? Don’t wait till month number 6 to see if you have enough in the bank. Let’s say you pay $700 for car insurance every 6 months. That means you need to set aside at least $117 a month, so by month 6 your check is ready to go.
- Do you ever find yourself with credit card debt come January? Instead, this January, start assigning some of your savings each month to build up your Christmas budget.
- What about your car taxes? This is usually the same amount, maybe a little less each year. Divide that end amount by 12 months and now you know how much to set back every month.
- Annual taxes are a little trickier as this can change from year to year. But look at what you paid last year and at least set aside that amount.
- What does your emergency savings look like? We recommend having at least 6 months of expenses set aside. So again, calculate your monthly expenses (don’t forget any debt payments) and add a little cushion, then multiply that amount by 6. Now that you know your goal, see how long it will take you to get to that point. If nothing else, at least work to save $1,000 as quickly as you can.
- It’s a given you’ll have some medical expenses. Look at your deductible and work toward saving at least that amount, if not more.
So, if you’re bad at saving and looking at the list above overwhelms you, what do you do? We’ve broken it down to three key tasks.
1. Set boundaries you can follow.
2. Talk to someone about your finances.
3. Remind yourself to save using a few simple tricks.
Let’s dig into each one of these tasks.
Set up boundaries:
This is hard. This is really hard. It takes discipline. It takes practice. It takes being intentional with your money.
But what does it actually look like?
First, find a budgeting system that works for you and your family. Even if you have separate accounts, you can still budget as if they’re together. You can create an excel sheet, do the cash envelope system or use a budgeting app your spouse can access too.
Your budget should account for:
- Monthly expenses
- Savings for those annual expenses (car insurance, home insurance, taxes, etc.)
- Emergency Savings
- Savings for financial goals (home, car, retirement, etc)
- Fun Money (eating out, movie tickets, new clothes, etc)
Second, if you struggle with saving, limit your credit cards and credit card purchases. Basically, limit your temptation to overspend. You might even talk with your credit card company to lower your credit card limit if you feel it’s too high for your income.
Set your goals, look at your income vs. expenses, and then build a budget plan that works for you. A little work up front can help decrease stress and unnecessary work later.
Talk to someone.
Don’t keep debt, financial struggles, or even your financial dreams to yourself. Instead, find a few key people you trust to discuss these topics with.
- Talk with a financial advisor about your goals. Build a plan with them on what you need to do financially to reach those goals. And remember to go back and meet with them again when goals or your financial situation changes.
- Find accountability. How comfortable is the topic of money in your marriage? Take steps to make money talk normal. Whether you hold each other accountable, or you look to a friend, it’s important to know your weaknesses in spending/saving. Talk with those you trust about it. Who in your life will say “Do you want that sweater or do you want to buy a new car next year?” Try not to be too annoyed with that person in your life, embrace them (even though in the moment you’d probably rather strangle them).
Remind yourself to save with these simple tricks.
Now to the fun part (according to those saving lovers out there). You might think that saving isn’t possible, especially after creating a budget and diving into all the expenses you need to save for throughout the year. But there are things you can do to shift your mindset from overspending to long term saving. Try a few of these ideas:
- Keep your goals front and center. Are you saving for a new car? Put a picture of your dream car on your fridge. Saving for a down payment on a home? Tape a small picture of it to your credit card. Saving for a big vacation or Christmas? Every sacrifice you make, imagine yourself on the beach next summer or the kids’ faces Christmas morning.
- Set up automatic transfers from checking to savings after every paycheck. Do you get paid the same time every week or month? Set up automatic transfers for the day after your paycheck is added to your checking account. It helps separate what is necessary income and what is officially in savings.
- Set up a special savings account like the Signet Christmas Savings Account. This will automatically take out the amount you set from each paycheck through October of the new year. Then we’ll mail you your Christmas savings check so you know what your Christmas budget is before the season begins.
- When you have extra savings, put it into something you can’t touch like an IRA or CD. This is only for savings you won’t need for years to come. If you have extra and want to save for retirement or for a new home in a few years, then talk to us about the best options for your money.
- Literally put a jar next to where you empty your pockets or wallet (or even next to the washer as you clean out all the pockets!) Any change you get, add it to the jar. It might surprise you how much you’ll save without ever noticing.
- Use apps that help you save money either up front or after purchase such as Ibotta, Fetch Rewards, Kroger App (for coupons), etc. These cost you some information while getting great benefits in return. With Ibotta you can learn about products, get bonuses for items you buy, and then get cash back after your grocery visit. With Fetch Rewards, you’re literally just uploading your receipt and letting it do all the work for you. And Kroger couponing can be done while you’re walking the aisles or watching TV, without scissors or paper cuts.
- Use Bill Pay. This is probably one of our favorite benefits of banking with Signet. It’s so simple, and it saves you a check, a stamp, and time. From your mobile app, you can pay your electric, internet, water, rent, etc. without writing a check or stuffing an envelope. Not sure how to set it up? Just give us a call!
- When you get excess cash (on top of your income), i.e. birthday/Christmas gifts, tax refund, stimulus checks, etc… decide now what you will do with the money. Will you use all of it as “fun money”? Will you put a portion of it toward debt and put the rest in savings? There’s no right or wrong here because you already have every dollar budgeted. But this extra can help you reach goals or just help you have a little fun while you stay on track.
So, what will your first step be to build a different mindset around saving money? You don’t have to do it all. Just take one step and start believing that you aren’t bad at saving, you just haven’t had the tools to help you in the past. Now you do, and you can soon become the annoying friend who says, “Do you want that popcorn at the movies or do you want to retire young?”
And in a strange twist of events, here’s an article to check out that talks about how saving money can actually be bad (for some people/circumstances). Check it out and see what we have to say.