5 clever techniques to trick yourself into saving
A lot of people want and need to save but not a lot of them are able to do so. When I was in deep debt (at least $70K to be a little bit more precise), I was consumed with the idea of paying off my debt and of saving at the same time. I have to tell you it was not easy. I thought it was close to impossible because I was the only working in the family and was not making a lot of money. I may have been fortunate to accomplish both paying off debt and saving, but many people who are in the same boat as I was may not be as fortunate as I was.
Over the past couple of years, I managed to create and adopt some saving techniques, some of which helped me save a lot more money and some...hmmm... not so much. I had to keep adopting different techniques because my family's situation changed a lot of times.
Change is something I know happens all the time and, generally, changes in saving or how one saves should change as well. One day your saving technique really works well for you but the next day it may not work as you want it to be. Changes happen and sometimes, they happen unexpectedly.
5 Clever Saving Techniques
In this post, I am laying out the different saving techniques that I know of. For those who are looking for tips and tricks, more like tricks, to help you save more, you will find one or more that may or will help you with your goal.
Automatic savings (a.k.a. forced savings)
For me, automatic savings is forced savings.
Roughly around 50% of my income goes to saving. Around 15% of my income is saved after all the taxes, deductions, and monthly expenses have been taken out. The 10% is directly deposited to a savings account that I have not touched since it was opened. I call it the 'ghost account'. The rest of the 50%, which is 25%, is directly deposited to my 401(k)-like investment account.
A long time ago and before I used automatic saving, I had told myself that once the paycheck came in, I would take a portion of it and save it. Did it work that way? Not really. Well, the answer should be not all the time. I ended up using the funds and my savings rate at that time was bad. Don't get me wrong. I was able to save but not as much as I hoped to save.
Automatic savings or direct depositing really works for me. Let's put it this way. My family has been able to work around with my net pay even when it's not a lot. I don't mind spending it all or most of it because I know that I have already saved money even before I receive my paycheck.
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Before direct depositing, there was weekly saving. I should say there is the weekly saving.
When I was young, my mom and dad told me that I needed to save money weekly. What they meant by that was they would give me money, which was around 2 pesos or around $0.04 in US, and it's up to me how much I would save every week. Every week, I saved 1 peso and by the end of the year, I had 52 pesos, which is around $1.25. It's not a lot but it was a lot for me.
Ever since I was young, I have adopted this savings technique. It never fails to work. If you ever want to try this technique, all you need are jars to place the money or whatever container or method you wish to use and some dedication and discipline. You need these virtues because you will be tempted to use your money especially when it's within your sight. The amount of money you want to put in every week depends on you.
Of course, some of us don't get paid every week and can't save weekly. I truly understand that because I don't get paid every week as well. I created a spreadsheet that I call the 'Saving Challenge' and that I included as an MS Excel spreadsheet attachment below. If you want to save weekly because you receive money weekly, then, you'll see the weekly savings table in the said spreadsheet (below). If you want to save bi-weekly, there's also a section in that file, too, just for you.
Constant payments as if you still have a loan
Do you know what you want to do when you're done paying off your debt? You know that once you are done with paying off your responsibility, you have some money free up for something else. If you really want to save money, that 'something else' should be saving or something as important as saving like paying another debt.
When I say make payments as if you still have a loan, what I mean by that is pay yourself by putting the money that would have gone to loan to your savings account, investment account, or something else.
When I finished paying my $70K-debt, I set aside the monthly payment to my savings account. My savings account has grown so fast in the past 8 months doing just that.
The reality is, for many of us, we find ways to use our money for something that may not necessarily be important. I know a couple of people who pledged to keep their money in the bank when they're done paying off their debt but failed to do it.
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When I got my first pay raise from my current job, I was happy because I knew that I would be saving the pay raise directly towards my savings or checking account. I was lucky because I did have the patience and discipline to keep my pay raise in the bank. My family and I managed to live off with my original income simply because we got used to living such a frugal life. Every time I get pay raises, I keep most of the increases in my savings account.
While I am lucky to save my pay raises, many aren't as lucky.
Do you find that your pay raises go to some other expenses? Do you find yourself spending more and more as your income increases? There was a point that I did spend my pay raise to something I really didn't need but I learned quickly not to do that.
When you are tempted to use your pay raise, you may want to convince yourself that you can live off at your previous salary level and that your pay raise is something that never exists. For me, one of the best ways to not touch your raise is to automate your salary and have your pay raise to go directly to your savings or investment accounts.
Coins as treasures
When I was in elementary, coins were treasures to me. I'd keep all the small coins I found on the streets, in my brothers and sisters' pants' pockets, and in some other places. I'd do it all year-long and by December, I had more than enough to buy me a toy or two.
Several decades forward, that's still what I do. It works well with me. I keep all my change in a big jar and go to the nearest Coinstar station I can find at the end of the year to have my coins counted. I'm always surprised how much I accumulate in a given year. In 2014, I saved a good $430 just from coins.
I like to continue the tradition with my daughter. Once she's a bit older and know what money is, I will teach her about the jar money technique.
Do you have any other savings techniques that work well for you? How much did you save using these techniques?
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