That's why it's so tough to save money!
Budgeting is tough, particularly when you're trying to actually set some money aside for the future.
Like losing weight or battling any addiction, saving money resides in the realm of behaviour that sometimes seems immune to rational solutions, says one ex-banker turned blogger. But it's often tough to get out of the gate without some help.
"My guess is that the best person to help you figure out how to save money is somebody who has suffered from living beyond their means in the past, and who has developed effective strategies for overcoming this problem," he says.
But if that person isn't readily available to you, you still need to figure out what's holding you back. That means tricking that rational mind and helping it get with the program, he suggests, including developing a better sense of just what's going on upstairs.
Here are a few things to consider:
1. The Hawthorne effect: Just as scientists acknowledge that observing something inevitably alters it, the longer and more closely you begin to observe your spending patterns, the more likely you are to shift them in a more positive direction. That skew that frustrates scientists will nudge you to better choices.
2. Radical transparency: Everybody like a pat on the back but not when it comes to dealing with money troubles. Don't flash the cash and pretend that everthing is ok. If you can steer your mind away from keeping your spending patterns secret, you may be able to tap into positive peer pressure from partners or friends. This could boost your determination when it comes to making difficult money-saving decisions.
3. Out of sight, out of mind: If you don’t have money in your hand, or don't spend a lot of time checking your bank balance, it’s much easier to forget that you ever had the money in the first place. Which, naturally, means you’re more likely to save rather than spend.
Each of these techniques operates on the subconscious in a way that doesn’t make perfect sense. But because that’s often where the problem lies in saving money so perhaps the solution resides there as well.
Do you find it tough to save? How have you managed to break those poor spending habits?
By Gordon Powers, MSN Money
Posted by: Bryan Jaskolka | Oct 30, 2021 4:04:45 PM
There are so many companies today that pay by direct deposit, and it's easy to have the bank set up your account so that 10% of anything coming in automatically gets directed to a savings account. This is a way to keep that money out of your sight and therefore, out of your mind.
Posted by: Bob | Oct 31, 2021 8:31:56 AM
Ya Brian good theory there but it does not work.
I end up spending it anyways on credit and end up using every dime I make. 38000$ is not a lot to support the family on especially after taxes.
I used to earn over 100G consistently but paid 47% of it to taxes.
My next pay is not too different that wise spending helps us meet the budget, but never do we have enough left to save.
Posted by: Freedom | Oct 31, 2021 10:53:19 AM
Right on Bryan. That percentage or more, if deposited in a registered account, such as a TFSA and not touched ie debit card etc. adds up nicely. Pay yourself first really does work. I have never earned more than $40,000. annually and am faithful to the 10% to 20% regimen.
Posted by: Joanne | Oct 31, 2021 11:04:39 AM
Bob - the issue isn't the amount of money you make, but, the fact that you are in the mind frame that you must spend every dime you make. Often, if the money is there, you spend it. If it's not there, you won't spend it. We put money into an account that is accessible, but, not too accessible - we can't write cheques on it nor do we have debit cards attached to the account. In order to get the money, we have to go into the bank to transfer the money, and we all know how hard it is to get into the bank during their hours. The more difficult it is to get, the less likely it is to spend it. There was a period of time when both my husband and I were unemployed due to lay offs and the only money we were making was Unemployment Insurance, which is NOT much money. We still managed to put money aside in this account, plus, put money into an RESP for our kids.
Really it's all about priorities. What's more important saving money or having a pile of cell phones, internet, home phones, cable and the bills that come with it? Of course, our priorities are different than yours, but, there are ways to save money in our daily lives.
Posted by: John | Nov 3, 2021 12:06:07 PM
I have never had to budget. I only buy what I need and when I need it. I know how much I make each month, and know when to delay expenses if needed. I always invest about 40% of my net income into retirement savings (both registered and non-registered). This isn't rocket science.
Posted by: Addy | Nov 4, 2021 9:06:07 AM
Its easy to save when you are making loads of money,
The truth is that through the years myself and others have had saving that has been eroded or stolen by investors or the government.
I use to believe in the future but there isn't much future left, enjoy what you have and with this economic climate ,soon the dollar will be worthless and the little savings that you have worked for will be gone,
Purchase something tangible; remember money is not tangible,
Ask friends and family that ha lost money because they thought that life was constant .
Posted by: Addy | Nov 4, 2021 9:11:57 AM
If the financial professionals was so good our society would not be in the shape its in,
Also these financial guru all they o is line their own pockets with your money and when the crunch come they say I'm sorry.
They are like insurance salesman.
Posted by: Bryan Reddon | Nov 4, 2021 5:27:55 PM
I know from experience that nothing will change until you and your partner, if you have one sit down and make a listing of EVERYTHING you spend money on for a period of at least 3 months. Once you have done this exercise you will suddenly see just where the money goes and what items might be
considered as overspending. Some items can be reduced through negotiations with the suppliers ie: Telephone, TV, Computers. Other items that need to be looked at are things like takeout coffees with all the add-ins. I know from experience that you will be shocked at where the money goes.
This process takes honesty on the part of all those who are spending the money and determination by those same individuals to make positive changes. If you can't do this for 3 months to see where you spending habits are, you will never ever get out of the hole you are in. This recovery process will not happen over night. It may take several years of determined cutbacks to get some cash put away and get your head(s) above water.
Posted by: Don | Nov 10, 2021 1:50:55 PM
One company, I think it was Manulife Financial, touted the idea of a single account. Sort of like a revolving line of credit that replaced your mortgage, your chequing account, your car loan, and your savings account. Supposedly it would save you tons of money because instead of sitting in a chequing or savings account and earning no interest, your cash float would temporarily reduce your debt and thus save you interest.
HOWEVER, I don't think ANYONE has the discipline necessary to control spending in an environment like that.