Little savings habits that make a BIG difference

It’s insane how quickly money can disappear, despite our best intentions to save. Part of a good plan, for any discipline you are trying to master, is to curb temptation or the risk of failing. Building wealth and saving radically takes a whole lot more than good intentions and goal setting. In order to achieve those goals, you must think ahead and try to automate as much as possible in advance so that the decision-making is done in the beginning when willpower is the strongest. At least that’s been my experience.

Here are three little savings tips that have made a major difference in my ability to curb spending and stick to budget in the last few years. I’m always looking for new suggestions so add yours in the comments!

1. Save and invest all windfalls, bonuses, tax refunds, and gifts that come your way.

This is not something I learned until I met my husband. In my single years, I would start planning what I was going to do with my tax refund months in advance. When I got a bonus at work, I would use some of it to pay off debt or save, but most of it I spent on fulfilling my backlogged wishlist on Amazon or at the mall. The amount I was going to save always got smaller and smaller once I started looking at that wishlist.

That’s how I was raised too. I remember my dad would get a yearly bonus at Christmastime and my mom would be talking about what she wanted to use it for, long before they had it in hand.

Don’t factor windfalls into your spending plan or budget. Mentally train yourself to see these amounts as off-limits, remembering that they are never a guarantee. Instead, when they arrive, see them as a power surge to your long-term wealth building goals.

2. Have a portion of your income direct deposited into the savings account

Rather than having your whole paycheck dumped into the checking account and then transferring savings and investments out, have them sent directly into those accounts. You can set up this distribution scheme with your employer when you fill out your direct deposit form.

This helps you stay on track with savings goals and mentally eliminates the temptation to not transfer as much to savings as you had intended to.

Also, rather than seeing the full balance of your income each pay period as one lump sum, you will only see the after-savings amount in checking. Out of sight, out of mind. When you don’t see and manually move the savings sum, you’ll “forget” it’s there and will not be as tempted to spend. What’s leftover is what you have in checking and what you get is what you get.

3. Put obstacles between yourself and your long-term savings accounts

It’s far too easy to transfer $50 here, $300 there from savings to checking when you get in a pinch, an opportunity comes up, or you just need to buy something.

(Guilty. Recently I walked to the convenience store at the end of the block for ice cream. We were 3 days away from payday and my debit card was declined. Pregnant, I HAD to buy this Ben and Jerry’s and of course, rather than transfer $6 which seemed silly, I moved $60 … just in case. If I had done that every pay period this year, that would be $1440 spent on a whim. Had that money been invested over a 20-year period, that could be a 5 to 10 K loss!)

What I’m saying is, there are true emergencies, but the majority of the things we think we need money for, we could simply tighten our belts for a few days and live without.

My spouse and I have found that adding a few layers of separation between our checking and savings has helped eliminate these high-cost mistakes.

When you have to: drive somewhere out of your way, spend more than 15 minutes, get your spouse’s approval, sit through a waiting period, etc. all those things will help you decide… nah, I don’t really need to spend this money, I’ll wait until I have it!

The idea is to make the inconvenience of getting the money “needed” equal to or greater than the inconvenience of not purchasing whatever the item is. The time it takes to transfer the money with roadblocks in place, will give you the time needed to question whether it’s really worth it or not.

This could mean:

• Keeping savings and investments at a separate bank
• “Hiding” your savings account balances from yourself online so you don’t see them on a regular basis and mentally can pretend they don’t exist
• Have a spouse or trusted friend or relative as an accountability partner, where you have to ask “permission,” in order to move any money backwards into checking.
• Invest as much as you can vs. leaving cash sitting in a savings account (we have a 10 K threshold — the savings can never dip lower than 10K unless it’s life or death. Each month, when savings money is deposited there, my husband immediately moves it to the proper investment account so that it’s “gone.” In my confession above, this method failed because we had a few hundred extra sitting there due to an upcoming insurance payment.)

These three little tricks have made a huge difference in my ability to stick to savings goals and live within my budget. Try them out and please share your suggestions as well.

This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions