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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 mentality.

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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," Blair says.

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 in Atlanta.

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
Next, 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 Beach, Calif.

Steve Rhode, president of, 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.

He 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.

-- Posted: June 15, 2005




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