The hardest part of any road, is starting it. Do you think to yourself that you're not the saving type of person? If I told you I'd be retired in just a matter of years, would you think it was impossible?
Then I challenge you to challenge yourself.
If you took some time out to re-assess an area of your life then you will find something which you can change to help in the art of saving. There's no point saying "I can't do it" and not doing anything about it - that's obviously not going to work. But if you say "I can do something" and actually do it, I'm sure you'll find subsequent changes much easier.
The Type of People We Are
I've always said that I'm not a morning person. I tend to stay up late. I sleep in. Does that mean I'm not a morning person? No, of course not. It just means I'm someone who stays up later and therefore gets up later. My day is shifted, I just prefer staying up later at night.
But I'm going to change that. I want to get up earlier. So how do I change? Easy. I simply go to bed earlier. There's no magical process to change from an evening person to a morning person, you just change one simple part of your life. How hard can it possibly be?
That's exactly how it is for saving money too. By just changing one small part of your life, you can start along that Long, Slow Road to Financial Independence.
The Little Things
I have spoken before about 10 Little Sacrifices which make a Big Difference and also in that post, I floated the idea of Zero Dollar Days. These are days when you literally spend no money. No cash purchases, no debit card use and no credit card use. Of course, you might have an automatic bill payment coming out that day, but you'd already planned for that!
It might take a while to get to the point where you can have one, two or many consecutive days in which you don't spend any money but you need to start somewhere and day 1 is always the best place to start.
Once you've done one day, the next becomes easier, then you'll have a few together and once that starts happening, you'll notice a huge drop in your monthly expenses.
One Technique on How to Start Saving
You've tried before to start saving but failed. You've tried again, stuck at it for a while but then completely lost interest. Well, here's a really easy and small way to start you off saving again but actually keep you saving.
1) Identify Something to Give Up
We've seen before that giving up your daily takeaway coffee can make a big difference, but it's not just coffee. Cigarettes and alcohol are also on this list. How about chewing gum, snacks or a daily scratch card.
Everyone has something in their life that they don't need. Sometimes it is also something they don't want but can't give it up. Either way, you need to do something about it and I hope this process will help stop you from buying it but also start you on the road to saving.
2) Budget for it
Let's take the old favourite, that daily takeaway coffee. Let's also say it costs NZ$4. For weekdays, that's $20 a week and over $1000 a year. That'd be nice if it was in your savings account earning 8% interest.
The only way to get it into your savings account, is to budget for it. Give yourself a budget of $4 per weekday (or every day to make things even better) of $4 for that takeaway coffee. Whether you spend it or not is irrelevant at the moment. At the end of the day, you have either spent it or you haven't. Just make sure you can remember! Note it down. Get into the habit of knowing where your money is going.
3) Snowflake the Difference
At the end of the day, log on to your online banking. Here, you do one of two things. Either (i) you spent the coffee budget on your unnecessary coffee, or (ii) you didn't spend it and saved yourself $4. If you spent it, do nothing, it's gone. If you're in the latter category though, transfer your allotted budget of $4 from your current account into your savings account.
If you don't log on every day, keep 7 fridge magnets in a column and each day move one into either the 'Spent' or 'Saved' group. At the end of the week, transfer the 'Saved' x $4 from your current account into your savings account.
By doing this, you've budgeted for a $4 coffee every single day. On the days you didn't buy one, you've essentially still spent it but instead of going into someone else's pocket you put it into another one of yours.
I feel that with this system by the time you've noticed how much you're saving, you won't want that non-essential item again. It not only helps you give it up but helps you on the road to saving too. Best of all, it's quite painless.
4) Never Decrease the Snowflake
Now that's you've budgeted for that coffee, keep it that way. Yes, you might have to odd one here or there but you'll probably be snowflaking well over 90% of your coffee budget. One trick though is to never decrease this budget and keep on going.
If you could survive by spending it before you can certainly survive by saving it now.
5) Repeat all Steps Again for Something Else
Of course, not everyone drinks coffee. And some people drink coffee, chew gum, smoke something, drink alcohol, buy magazines, snack on chocolate, get takeaways and a myriad of other things designed to take your money away from you. If that's the case, start on one and then move onto the next non-essential item.
After a short while, you'll be amazed at how quickly your savings are building up. All from money you used to spend you now save. Yes, you're allowed to buy some bits and bobs infrequently since you don't want to cut everything out of your life but soon you'll prefer saving it to spending it which will keep you on the straight and narrow.
Now that your savings have started you'll also start to notice something else too. That particular account will start growing of it's own accord and you don't even have to lift a finger. Once that interest starts coming in, you'll then start to realise that the money itself is making money for you too! It's like a double bonus.
What other tips do you have for other people who want to start saving but can't?