Setting aside money for saving can be difficult, but there are many benefits to it. For example, savings is a way to put yourself first. You can benefit from the power and opportunities from saving: becoming more self-sufficient, avoiding high interest credit card or loan debt, being able to pay for things with cash instead of going into debt, purchasing a home, building wealth, and more.
If it is challenging to set aside money for saving, here are several tips to help you start. If you are saving already, these tips can help increase savings.
Cut back on what you don’t need anymore
Review your bank statements to see what you are spending. There might be online subscriptions or other things you forgot you signed up for. Fix the leaks in your budget by cancelling what you can scale back on. You will need to have a heart-to-heart with yourself and the person with whom you share household expenses about wants versus needs.
Put a limit on flexible expenses
There are bills that are fixed, such as utilities, housing, insurance and car payments. Then, there are periodic bills, like car tabs, annual subscriptions, car repairs, summer programs for the kids and holidays. The flexible expenses such as food, clothing, haircuts, personal interests and entertainment are harder to manage. An easy way to control these flexible expenses and ensure you can afford both fixed and periodic expenses is to put a maximum or limit on the amount you spend on flexible expenses.
Here are some tools to try:
- Open a separate checking account with its own debit card, and label the card “Food and Fun.” After you determine your fixed and periodic expenses, transfer a set amount of money weekly or monthly to that card, based on what you have left over after budgeting for the fixed and periodic costs. Keep the bank app for that debit card on your phone, and check the account balance before making any purchases at the grocery store, eating out or paying for any other flexible expense. Then do some quick math in your head. Calculate whether you have enough in the account and enough food already in your pantry or freezer to last until more money is automatically deposited into the account. If there is not enough, don’t buy.
- Some people like to have multiple accounts for multiple flexible spending categories, such as one for gas, one for groceries and one for miscellaneous.
- Some banks allow you to differentiate target amounts for your savings or spending goals in “sub-savings” or “vault” accounts. You will still have a set amount going towards your flexible expenses in your budget and stay within those target amounts, and you won’t have to open separate accounts with separate debit cards.
Allowances for adults
Setting limits on flexible spending can be a real challenge for people in committed relationships if one person gets to the flexible spending card first, uses it for their flexible expense needs and leaves the other person out of that decision-making process. Even if you are communicating effectively about expenses, the time it takes to mutually agree on your everyday financial decisions can feel draining and annoying.
Having separate allowance cards is one solution that can keep the peace and help with savings goals.
One couple that I met had always wanted to travel but never seemed to be able to save for it. They were always saving for car and home repairs and things the kids needed. A deep dive into each line item in their joint checking account revealed categories that could be cut back, such as eating out and occasional purchases that were personal interests or wants. The couple decided they would no longer use their joint account for eating out. They also decided they would not use their joint account for any purchase that was personal, such as going to a salon, gaming or buying something “just because” — even if it was a gift for someone.
Instead, the couple decided to open two separate accounts, with a set amount transferred to each from their joint account — an adult allowance. They labelled the debit cards tied to each of their accounts. Now each had their own card with the task of reigning in their spending however they desired, without having to consult with the other person. They shared the same mission of wanting to save more, but having money of their own spared them from judgment on this journey.
There was a learning curve, and the couple made tweaks over time, such as transferring money twice per month instead of once and adjusting the amount. It also took communication. They held biweekly money talks at a scheduled weekend time, with a timer to help them focus. When they went out to eat, one person would have to decide to treat from their account. When they wanted to treat themselves to something like a haircut at a salon, or if they wanted to buy a friend a gift, they had to use their own personal account. They didn’t have to discuss any of those personal purchases; they just had to not overdraw the account. To be transparent, they did allow the other person access to view their account.
When they met to discuss their finances, they made sure this new plan worked for them, and they saw more money collecting in their joint checking account. Eventually they set up an automatic transfer each month to a travel savings account, then sat back and watched that grow.
Talk it up
Tell family and friends what you are doing to save money. That way others will know why you might have to cancel plans sometimes or order less when eating out. Make taking care of yourself financially a topic to be shared. You might rub off on others and help them save too.
Think creatively
Just because some things usually cost a lot of money — big celebrations like birthdays, weddings and graduations — doesn’t mean they always have to. Figure out how to make these traditions work for your budget, or make a plan to save up for a big celebration before it happens.
We are social beings, and one way we show love and gratitude is through monetary gifts. There are also other ways of expressing our feelings that can work for your budget. Spending time together, thoughtful words, listening to one another, sharing a talent, or offering help where needed are appreciated and don’t need to cost as much as an expensive gift. For kids and the young at heart, free gifts include playing games, singing songs, making food together, telling stories and giving hugs. With friends, meeting at each other’s homes, going on a bike ride together, or packing a picnic lunch could be an alternative to meeting at a restaurant.
Make saving automatic and keep saving
Set up a savings account, and make the transfers into that account automatic. Then pretend that money doesn’t exist. You can always use it in an emergency, and you will be glad it is there when you need it.
Keep saving as you deal with other financial challenges. Even if you are struggling to pay off debt, your debt repayment plan should include setting aside money.
Building savings takes time and commitment
Saving takes effort. There is always something that you wish you had now, and it can take discipline to instead squirrel away the money for when you need it later. Saving means adopting and maintaining a strong belief in your future to budget carefully and calculate how to pay for future expenses with the money you have saved.
Saving can also mean setting healthy boundaries. Many of the people that I have counseled feel guilty if they have money left over and they are not giving it away to anyone who asks for it. While it might be important to you to help those who are struggling, keep in mind your long-term goal of being financially independent and financially healthy. Savings is key to getting you there.
You will find that making these efforts is worth it, because you are taking control of your financial life and reaping the benefits of saving.
We are here to assist you! Our certified financial counselors can discuss other budgeting and savings strategies with you. Call 888.577.2227 to set up a free, confidential appointment.
Author Sarah Jannusch is a certified financial counselor with LSS Financial Counseling.
