Developing a savings mind-set
Saving is not the American way. We're
a society of spendthrifts. But saving can become your way if you develop a different
There are plenty of reasons why
it's hard to change our misbegotten spendthrift ways. We're bombarded
by advertisements on television, radio and in print that equate
spending with happiness and encourage instant gratification. There's
also that ubiquitous, keeping-up-with-the-Joneses phenomenon. "People
believe that to be socially accepted, they have to buy things,"
says Billie G. Blair, an organizational psychologist and owner of
Leading and Learning Inc., a management consulting firm in Los Angeles.
Saving isn't instantaneous.
It takes time and forethought.
Before you can make the switch,
you need to consciously decide that's what you really want to do. You have to
commit to it and be willing to change. "It's a behavioral change that must
come from the individual believing that it's important enough to commit to,"
For some, hitting rock bottom can be the jolt
that motivates change. Many fall into that abyss when they face the prospect of
losing a home, overwhelming credit card debt, a job loss or a family illness that
causes severe financial hardship.
But if you haven't been pushed over the cliff yet,
some self-introspection can do the trick. Take a good look at your
finances and where you'll be 20 years from now if you don't stop
spending and start saving instead. The realization that you'll be
living lean during your retirement may be an incentive to change,
says Bobbie Munroe, a certified financial planner with Fraser Financial
After you commit to change, spend time deciding what
you want to spend your money on. This doesn't mean you have to start
thinking about a "budget" exactly. Instead, take a more
visionary look at your finances and your financial goals. What is
really important to you? For some, it may be a home, their children's
education or maybe being able to become a ski bum.
"Set a goal, because saving money just to save
money is not all that gratifying," Blair says. Having a stated-saving
goal, whether a vacation or a new Wolf range for your kitchen, will
provide the impetus.
The Zen of spending
become aware of what you're spending money on. Many of us get detached from our
spending. We use a credit card and it somehow isn't as real as pulling out a $20
bill or using a debit card that automatically deducts from our checking account.
Get in touch with what you are spending money on and when.
Keep a spending diary, and write down every expenditure
and the circumstances surrounding it. This will not only put yourself
in touch with your "inner spender," it will point out
why you shop. For example, is shopping an emotional release? Something
you do when you're upset or bored?
Keeping a spending diary will also let you find quick-and-painless
ways to save money. Maybe you'll discover you're spending $20 a
week on lattes and you'd be just as happy brewing your own for considerable
savings. Or maybe you'll see how much you're spending on finance
charges for your credit card and will decide it's better to pay
by check or simply withdraw more money from the ATM. "The most-effective
thing you can do is look at the hidden ways that money leaks out
of your life," says Tina B. Tessina, a psychotherapist in Long
Steve Rhode, president of MyVesta.org,
a nonprofit consumer education organization in Rockville, Md., suggests
looking at alternatives to your fixed expenses. Many people spend
too much money on car loans, insurance, phone service and so on.
Investing a little time in comparison shopping can save big bucks
without having to sacrifice. "It's a way to reduce expenses
without changing your lifestyle," Rhode says.
also suggests starting out small. Set achievable savings goals. "If you take
little manageable steps and increase your savings without totally depriving yourself,
you'll be more likely to stick with it," Rhode says.
Crash diets never work because dieters feel so hungry
and deprived that they end up bingeing on food. Sometimes going
on a diet can actually lead to a weight gain, as dieters go from
eating grapefruit only to splurging on a pint of Häagen Dazs.