Why do most people struggle to save money?
One of the common problems that I see is that people believe that they have to cut out things they love in order to save money.
And while I do believe there are times when it is appropriate to cut spending aggressively, like if you are facing bankruptcy, the rest of the time, this view on saving money can actually be detrimental.
The goal should be to find ways to save that you can enjoy and feel good about.
If you are cutting things you love, that isn’t going to feel good and you won’t be able to keep it up for very long.
Instead, try to find ways to save money that you enjoy so that it can become a long-term habit which can pay dividends every year going forward.
Now I am guilty of this attitude too. Every year for the last 3 years I’ve asked myself, “How can I save money this year” and “What expenses can I cut?”. And every year my gut reaction has been “I am already frugal, there is nothing else that I can cut without seriously decreasing happiness.”
But I believe that this is a self-limiting belief.
Here are the things I do to overcome this attitude:
- Research ways to save
- Experimentation
- Find Synergy with values
Research ways to save
You will need to brainstorm HOW you COULD save money. Luckily there are tons of great resources online that can help.
One of my earliest financial habits when I wanted to improve my finances was reading an article per day on MSN Money. I’d read “How to save for an emergency fund” or “101 ways to save money”.
Another research strategy that I love is to identify the categories in which you are currently spending money and then Googling each one after “10 ways to save on X”. Utilities, Groceries, Restaurants, the money nerds are active on the internet so you will find so many creative ideas that you can leverage in your own life.
Experimentation
I love to think about saving money as a series of experiments for three reasons.
- It’s temporary. You are sure to experience saving fatigue if you try to cut out things permanently. Instead you can just say to yourself, “for the next month I am going to experiment with cutting Netflix”. I can reactivate my account afterwards if I discover I can’t live without it. For me, expense cutting is easier to stomach if it has a promised end date.
- It’s fun. I find that experiments or challenges actually help make saving money fun for me. This is, once again, probably because I’m super competitive. So I get satisfaction from knowing that I’m doing hard things that other people aren’t doing.
- It’s empowering. Running experiments where I change something or go without something proves to me that my stuff doesn’t own me. I can go without. I’m in charge of what I spend money on and there isn’t anything in my finances that I can’t control.
Rules: I do have a couple of rules for experiments.
- Must commit to break even. When I was in college, I considered buying a bike so that I could save money on gas. Spending money to save money can backfire. If you spend money and then don’t use the item, the experiment was counterproductive to the goal of saving money. So I calculated how many times I would need to ride the bike in order to break even on the purchase. It would have saved $X of gas for each trip and the bike cost $X so I needed to ride it X times for it to pay for itself. Then I committed to riding it that many times and then ACTUALLY tracked how many times I rode to work to make sure I got the value out of the purchase.
- Give it a fair chance. It took a while to build up the leg strength before I enjoyed biking to work. Also, it takes a while for tastes to adapt. I hated Nutella when my husband first brought a jar home. Didn’t see the appeal at all. But if it’s the only sweet thing in the house…you know…it’s better than eating carrots. By the time we got to the bottom of the second jar I was hooked. And now I love it so much I even dip pecans in it (which is a bit of a nut inception; dipping nuts in nut butter). People give up on their saving experiments too easily. Try to stick it out a predetermined amount of time or set some other criteria for sticking it out.
One of the other benefits of experiments is that there is a review/analysis at the end. At that point, evaluate how it went.
The experiment went poorly? Move on to the next experiment. I went through trials experimenting with off brand mayonnaise and hated every second of it. Now I buy Kraft mayo (not sponsored) and don’t feel guilty about it. Off brand mayo isn’t for me and that’s alright. I saved a little money while we worked through some of those bottles of white garbage and now I know that I value good mayo.
The experiment go well? Great! Then you have a couple options, you can either swap permanently or you can rotate between the initial habit and the new habit (like switching back and forth each time, which is what we do for off brand/name brand cereal).
Synergy
The word “Synergy” is gross industry jargon, I know, but it perfectly describes how I view saving money in a way that aligns with your values.
To make saving money sustainable, it must support one or more of your values. If the strategy doesn’t align, you won’t be able to keep it up long term.
The first step here is to identify your top 3 values.
Do you highly value family, environmental impact, spirituality, health, contribution?
Once you have identified what you value, find ways to save that support or encourage those areas.
Examples:
Family hikes are a great way to spend quality time with family AND save money (vs family movie theater nights)
Hang drying clothes on racks is great for the environment AND saves you money on electricity (vs running the clothes dryer)
Biking to work is a great way to get exercise/improve health AND saves you money (vs burning gas to drive your car to work)
Why is this so important?
Making saving sustainable will help prevent yoyo spending/binge spending that people often experience after trying to cut back on spending. If you get burnt out from cutting expenses too extremely, you may end up on a shopping spree. Having sustainable saving habits helps even out the emotions of saving. Since it supports your values, you can feel good about doing things to save money.
Our habits shape us. If we can create a frugal lifestyle instead of just cutting lovely lattes for a week, it will be a long-term win. Having frugal habits will pay long-term dividends instead of just short-term gains.
I don’t want to live a restrictive life and suspect you don’t either! I want to have the freedom to do what I want, when I want, with whomever I want.
I believe that if we can find joy in saving money, we can truly “have it all”.
Discussion:
What’s a time that one of your savings experiments was a FAIL?
What tips do you have for making saving sustainable?