We’re here to help you learn how to save money. Like diets, drastic changes don’t usually stick. If you’ve ever tried to shed a few pounds, you know there are plenty of diets to choose from. Whether they’re dictating how much you can eat or what types of foods are acceptable, most diets have one thing in common – they’re unsustainable. Sure, they might provide a quick fix to get you back in your favorite pair of jeans, but they aren’t going to keep you healthy in the long run.
The same types of “diets” are commonplace when it comes to your finances. You can set goals to save more money or cut back on frivolous spending, but long-term success will likely still be out of reach unless you actually change how you view money.
True success comes down to lifestyle changes – altering how you view and interact with money (or food).
The Problems with Dieting:
The greatest challenge with most diets is that they’re designed to be temporary. Even “lifestyle-changing” diets usually become short-lived. Let’s face it, no one wants to go the next 30 years avoiding bread, let alone garlic bread! Obviously, some people have medical reasons for avoiding certain foods, but it’s not usually sustainable for those who do it by choice.
Soon after you reach your short-term weight loss goals, your taste buds spring back to life. With that, your old habits can come back. Before you know it, you’re right back to where you started.
The same thing happens with your financial goals. Whether they’re New Year’s resolutions or goals you’re setting today, if they’re not sustainable over the long haul, they’re destined to deliver mediocre results. Here’s how to save money with small changes versus drastic ones.
What are Lifestyle Changes?
When you hear the term “lifestyle change,” you probably imagine a huge life adjustment. Luckily, in a financial sense, it’s generally much simpler.
The goal is to alter your spending and saving habits to improve your financial well-being. As you’ll see, there are many small moves you can make that will compound into something much greater over time.
But first, you need to change your perceptions of money. That means, how you view and spend it.
Changing Your Outlook on Money:
Financial habits don’t form overnight. Likewise, you won’t be able to completely change your spending and savings practices in an instant, either. But, you can become more aware of how you’re interacting with your money and make progress everyday.
Here are a few examples of how society shapes your financial habits for the worse:
- Saving: Advertisers spend big bucks convincing you to part ways with your money. Their goal is to keep you focused on the present – not on your future goals. Consequently, less money goes into your savings, creating more challenges down the road for future you.
- Credit Cards: Originally intended to help people cover emergency expenses and spread out larger purchases, credit cards have taken on a whole new life. They’re one of the most popular forms of payment today because of the convenience. Even making $0.99 in-app purchases are normal. But, this is NOT the intended use for credit cards, yet society makes these practices seem normal.
- Debt: While loans are often helpful in achieving larger financial goals, too much debt is not ideal. However, it’s common for households to have multiple car loans, a mortgage, several credit cards, and student loans. The uptick in borrowing stems from the desire to have everything now instead of saving over time.
Society plays a significant role in your money habits, whether you realize it or not. Taking a step back and reevaluating your spending practices can be eye-opening. For example, how would your finances change if you only used your credit card for emergencies?
Examples of Lifestyle Changes:
Altering your spending or saving habits doesn’t have to be extreme. There are many little tweaks you can make that will have a significant impact on your finances over time. Learning how to save money doesn’t have to be difficult.
- Automate Your Savings: Use payroll deductions or automatic transfers to ensure money consistently finds its way into your savings account. Once it’s set up, you don’t have to worry about it again. The idea is to pay yourself first. Put money into your savings before doing anything else.
- Balance Your Budget: Creating a budget is smart. Balancing it regularly is crucial. Spend 30 minutes a week updating and balancing your budget. It’s an excellent way to remain mindful of your spending and ensure you’re on track to reach your goals. Need help with this? We have financial coaches who can help you make a budget or create a plan to clean up your credit.
- Set Spending Limits: Find ways to restrict how much you spend at a single time. There are many ways you can do this, including:
- Credit Card Alerts: Most credit cards allow you to set spending limits or alerts when you reach a specific dollar amount. Keeping your spending below 30% of your credit limit will also help boost your credit score!
- Waiting Periods: Set a rule with yourself that any purchase over a specific amount requires a 72-hour waiting period. You might change your mind if you think about it for a few days.
- Cash Allowance: Give yourself a cash allowance for the month. Once the money is gone, it’s gone. People tend to think harder about purchases when they visually see the money in their wallet disappearing vs. swiping a card.
- Analyze Trade-Offs: Every decision has a trade-off. Back to our food example, you can eat a greasy cheeseburger and fries now, but you might feel sick later. Likewise, you could have more money for your yearly vacation if you buy a cheaper car.
- Round-Up Your Payments: When making your loan payments, try to round up to the closest $25 or $50. For example, if your payment is $356, make a $400 payment instead. Even if you paid $375, that extra $19 is going right to the principal balance. Every extra bit will help you repay the loan quicker and reduce the amount of interest paid.
- Pay Yourself First: Make your future self a priority. Transfer money from every paycheck into your retirement accounts or savings immediately. Then, use the remaining funds to cover your bills and other expenses.
- Think About Purchases in Hours Worked: Determine how much you make per hour after taxes. Then, use that figure when making purchases. For example, if you make $15 an hour and a new top is $60, is it worth working 4 hours to get it?
We’re Here to Help You Learn How to Save Money!
Lifestyle changes pertaining to your finances don’t have to be extreme. Start slow and work to become more conscious of your spending and saving practices. Simple tweaks can lead to significant results over time. You’ll know how to save money in no time.
If you’re interested in learning how to automate your savings or consolidate credit card debt, we’re always here to help. Call, chat, text, or stop in! Our team is here M-F, 9am-4pm ET. (315) 671-4000.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.