Establish the Saving Habit
“Good habits, once established, are just as hard to break as bad habits.” – Robert Puller
We are creatures of habit, for better or worse. The best financial habit you can establish is the habit of regular, consistent saving. At least initially the amount you save isn’t as important as the simple act of doing it. Get started now by saving whatever you can. 10% is a great place to start but if you don’t feel you can save that much start with 5%, or even less. Pay yourself first and do it consistently every time you get paid. Chances are you won’t notice much of a difference in your lifestyle but the act of saving will improve your outlook and give you hope for a better future. Many studies have shown that savers are happier than those who don’t save, even in areas of their lives not related to money. Once you get started you won’t want to stop.
Saving successfully is all about attitude. I once read about a study in which a group of people were asked if they could save 10% of what they made. The majority said they could not. Another group, similar to the first in income, were asked if they could live on 90% of what they made. The majority of them responded that they could. If it helps don’t think of saving 5% or 10% of your income. Think of living off of 90% or 95% of your income. Do whatever you can to convince yourself to start saving. The payoff will be huge.
Put Your Savings Plan on Autopilot
Once you commit to saving the easiest way to follow through is to put your saving plan on autopilot. Do this by having the amount you committed to save taken directly out of each paycheck. That way you never have the chance to get attached to it. Writing on why this strategy works so well, Ronald T. Wilcox, in his book Whatever Happened to Thrift: Why Americans Don’t Save and What to do About it, said “Remember, when it comes to money, it is better never to have loved than to have loved and lost.”
If automatic transfers from paychecks are not possible where you work the next best choice is to set up a recurring transfer from checking to savings at your financial institution. Set this transfer up to happen on each payday. The key is to make it automatic. If the default position is to save you will be much more likely to stick with it. Make the decision to save once and be done with it.
The ease of setting up automatic transfers is one of the reasons I think becoming a regular saver is much easier than establishing other worthwhile habits. For example, if your goal is to eat healthier you have to make many good decisions each day, but to become a great saver you only have to decide once. If you are not already saving through automatic transfers start immediately. Commit now to saving part of everything you make, and then put your plan on autopilot through automatic transfers. As the popular Nike slogan says, “Just Do it”.
I would love to hear saving success stories from readers. How have you successfully established the saving habit? Were automatic transfers important to your success? What other strategies helped you in establishing the habit of saving?