Saving is a Habit
Posted by Gail | Filed under Saving
Personality categories abound. Are you an introvert or an extrovert? An initiator or a procrastinator? Do you organize everything or live a cluttered life?
In the world of money, the basic categories we often use to determine what kind of financial personality you have comes from this question: Are you a spender or a saver?
It’s easy for those who are predisposed to saving to carve out some money from their spending plans for the future. After all, saving feels good to them, like wrapping themselves in a soft, warm blanket.
But what if you’re a spender? What if the idea of saving money is so foreign to you that you can’t even imagine it. After all, you barely make enough to live. You’re in debt. You work hard and deserve nice things. There will be plenty of time to save in the future. Wow! The reasons to Not Save are endless.
If money burns a hole in your pocket, then you’re likely spending it faster than you make it. Saving isn’t even part of the game plan. But I have news for you. If you don’t start to save you’re headed for disaster. Not saving is a sure way to have nothing later. And learning to save is a habit – anyone can establish it.
While you may have a tendency to want to spend everything you make on stuff that makes you feel good, only irresponsible dopes actually act this way. If you’re determined to be strong and take control of your financial future, you can take advantage of the habitual nature of saving and make it work for you. I’m not talking about a ‘spending diet’. Lord, I hate it when people talk about responsible money management as a ‘diet’. Have you noticed that diets don’t work. In fact, they often lead to more weight gain. If you think of a spending plan as a ‘diet’, you can end up falling off the plan and watching your spending diet backfire financially.
If you want to become a real saver, you’ll have to focus on making small, manageable changes that will stick. Don’t give up coffee completely. Just decide that you’re going to trim back your coffee habit by 25%, 30% or 50% a week, and send all the money you’re not spending to your savings.
Forget about giving up all entertainment. It won’t stick. Don’t commit to spending little or nothing on clothes, unless you’re finding a way to shop for way less, like hitting the second-hand store and becoming a bargain queen. And don’t give up reading, just give up buying books: head to the library for magazines, books, audiobooks, movies. Love to eat out? Go ahead. Have a salad and dessert with your friends and skip the glass of wine. Love movies? Go on the cheap days or wait for the movie to hit DVDs, then rent it and have a pot-luck with your best friends.
There are heaps of ways to have a life and save too. Just because you’ve decided to become financial responsible does not mean you’re doomed to a life of boredom. Small luxuries will still have their place. You’re just going to trim back and really appreciate them when they come along.
Money is an exhaustible resource. It runs out. If you want to have some for later, you’ve got to Not Spend some now. This is not about hoarding all your money and having no fun. And it doesn’t matter how small you start. As long as you begin developing the saving habit, you’re heading in the right direction and momentum will carry you along.
Just start and watch habit become your friend.
June 24, 2010 at 6:41 am
I remember as a child saving the coupons on the back of cereal boxes to get that wonderful Yogi Bear bank. Once I got it, my personal goal was to fill it to the top with pennies, nickels, dimes. Then I’d use the funds to buy other sought after goals (e.g. lilly of the valley perfume for my grandmother, a scooter, later a pogo stick, etc.). This was a good habit to develop as a child. Then I set other goals as I grew older (e.g. money to travel through Europe as a teen; funds to go to grad school in the states, etc.).
Now I have my money automatically go to various funds (RESPs, TFSA [emergency fund], etc.). I find it really helps to have a concrete goal as to what the funds will buy in order to steer the course and meet these goals.
June 24, 2010 at 6:58 am
Doreen, I am very similar — I have found if I don’t have a goal for the savings, they get spent really easily. For the longest time it was what hindered me from getting the emergency savings up to par. They were for an arbitrary scenario.
Now it is in 3 accounts; 1 for when things breakdown in the house, 1 for last minute travel (ie family illness or death as these are things that caused big debt increases in the past) and 1 for the option for myself of my husband to quit our jobs in they got bad. More concrete reason give me a savings goal and if I have a goal I am more prone to following it through.
June 24, 2010 at 7:36 am
I think being a saver is something that has to be learnt. I used to spend everything I worked for and then some extra just to make sure I beat my chances of saving firmly into the ground.
I now am a saver. though it took alot of hard work to get to this place.
regards,
Jason
June 24, 2010 at 7:51 am
I have automatic funds transfers set up on paydays to help me save, along with payroll deductions to my Employee Share Option Plan and RRSP. I save for my son’s RESP, my car maintenance account and emergency fund.
Right now, along with trying hard to stay out of debt, that’s the best I can do. I am saving 7% in retirement, plus my employer matched 3% = 10%. That’s not including my son’s RESP. The other funds I save are used periodically as needed.
I must say, since starting to save automatically, as Gail recommends, it feels really good to check my ING account and watch it grow. I get peace of mind knowing that the money is there IF I needed – even if it’s not very much at this point.
Once my DH is back to work, I hope to be able to increase our emergency savings and also rainy day/slush fund savings. When he finishes his schooling I sure hope he finds work earning more than EI is currently paying him. My son will be starting school this year and our child care costs will be reduced by $170/mth. That will help our budget a lot.
I’m trying to think outside the box and come up with other forms of income as well. We are considering relocating to a smaller town about 50KM outside of where we live, provided I can transfer jobs. The housing costs are lower and we want to buy a 2 unit home so we can have rental income. We figure that if we live in that home for a few years and save the rental income, we can use it for a down payment on a single dwelling home for us, and keep the 2 unit home for a rental property. My DH is facing health issues which may make it difficult for him to work so having rental income could potentially supplement his income. Hopefully, we won’t need the rental income and we can re-invest it until retirement.
I am a spender. I enjoy spending. BUT, I also enjoy having money in my wallet. I’m trying to find a balance.
June 24, 2010 at 8:05 am
I thought I was a saver. As a child I would put my money away. In my 20’s I had student loan and made the payments, I made more money than I spent but there was no conscious saving aspect to my finances. If I could pay my credit card off and the bills and contribute to an RRSP I thought I was good.
I was very wrong, I was an absent minded spender and a clueless financial planner.
So now I am trying to be a true saver. Starting small with $100.00/month. I like to see that balance grow and my debt get smaller. Too slow for my instant gratification mind but still making a change in my life.
Baby stepping it to a habit.
Michelle
June 24, 2010 at 8:12 am
I’m inherently a saver, but I veered off that path in my 30’s when the hustle and bustle and excitement of starting a family was upon us. Working less so I could be home with my babies, while spending more to give my little ones the best of every thing and experience = a big debt hole!
Today things are different. I woke up and realized that if *I* don’t save for my future, no one else will do it for me! It was MY responsibility so with that in mind we started the slow and arduous climb out of the debt hole. Now we’re climbing the savings mountains and it feels great! It’s not always easy but it is very much worth the effort.
June 24, 2010 at 9:24 am
In the past I was a saver, got off the track and now I am back into it, It is never too late to start. Auto transfers work for me.
I am determined to be a person who does not have to have everything I see. If I see something I now save for it , and by the time I have the cash, I don’t want it anymore.
Works for me.
June 24, 2010 at 9:36 am
I have always been a saver but when the caca hit the fan last year, I became a very good saver. We surprised and impressed ourselves by how much more we were able to trim from what we thought was already a tight budget with no wiggle room. It’s a pretty bare bones affair but we didn’t cut some things that seem obvious, like the long distance plan. We had planned to cut it, but not being able to call my family would have driven me insane, so it became a need.
I think there are various steps on the path of saving, some save more and some save less. The point of saving is to make sure you have options for yourself should something bad happen. If you’ve hit the saving wall, there are still options, like get a second job. It’s hard work, I won’t deny it, but I like that only my baby keeps me up at night.
June 24, 2010 at 9:40 am
As a teenager I saved for everything. As a university student, ditto. Then came the first car and first loan followed quickly by engagement, wedding, honeymoon, children, house, and heaps of credit that would get paid off eventually. After all, life’s about being in debt forever right? (note, tongue in cheek image inserted here).
Fast forward to going back to school, more debt, new and better job, new and bigger home (and mortgage), and new and bigger items to fill up said house. The job salary increased exponentially, and then the bubble burst last year and I had to take a job at less than half the salary I was making (mid 6-figure salary, so my current salary is still nothing to sneeze at). I had debt, oooeeee did I ever have debt. But thanks to Gail’s site and so many contributers here, I’m less than half the debt I had, I’ve increased my RRSP’s by almost $16K in a year, and I’ve got actual savings. Yes, it’s a habit, and if I hadn’t stopped thinking I had to pay off the debt before I could save, then I’d still not be saving and I’d likely still be as in debt as I am today.
It’s all a matter of prioritizing, remembering to pay yourself first (even if it’s $25/month, it’s still $25 that you didn’t have before that would’ve been blown on takeout or lunch or something assinine), and getting down to brass tacks of knowing you’re the only one responsible for your financial future. Trying to be an ant is hard at first, but I don’t ever want to be a grasshopper again!
June 24, 2010 at 9:44 am
I think the key to savings in the automation. I am one of those people who likes to save (I too had a decent savings account as a pre-teen) but it’s easy to let it slip through your fingers if you’re not careful (especially if you have a partner that leans more toward the spend side), so we have our RRSPs automatically deducted each month, and weekly withdrawals to the emergency fund. I find if it’s treated like the other bills that are withdrawn from our account, you don’t question it. This way I know that if there is money in our joint account, it’s ours to spend, because everything, including savings, is already gone from that account. I’m still working on systematically saving for house/car maintenance and travel dreams. I figure it’s a work in progress.
June 24, 2010 at 9:47 am
I think one of the best things I ever heard, when I said that I’m just not very socialable was someone who said that “well it’s not like the nurse comes out cradling a baby and says ‘this one is going to be popular’ or ‘this one is going to be shy’) – in other words, yes some people do get different gifts than others naturally but in the end, most behaviour is learned. There was a book that came out that talked about the rule of 10,000 – which is that no matter what the person or the task, it takes an average of 10,000 hours of practice to get good at it, and he looked at sports stars, piano ‘prodigies’, chess players, whatever. I liked that. Wayne Gretzky didn’t just pick up hockey on Tuesday afternoon and play in the NHL Wednesday, basically.
PS @ STE from yesterday – I heart Nederlands too. I picked them to win the tournament from the start (I think Germany has a good chance to get to semi-finals, but they’re a very young team and so this is a practice round for 2014 – when they will absolutely shine).
June 24, 2010 at 10:42 am
Saving is hard for us. We have auto transfers set up, but it seems like everytime we get a little stockpile of money in the bank – something happens like the hot water tank breaking.
But – everytime that happens, we dust ourselves off, add that category to our budget – and keep on having our auto payments start stockpiling again.
June 24, 2010 at 10:48 am
I am split personality. And the saver and spender try to trick each other. Luckily the saver is more devious, and the spender is more oblivious.
For example, I charge everything on my credit card so that I get points. I go to the stores without lists even though I know it would be better to just buy what I need. And although I am trying to budget, I do manage to buy a majority of what I want. But I make myself go online every couple of days to check the credit and bank balance and I pay off the credit card each month. Recently I got an ING TFSA and set the savings goal ridiculously high – because the saver has tricked the spender into thinking that I need that amount. 8 months emergency fund of my current spending rate.
If I were to lose my job or become ill, I would cut back for sure — 8 months of what I currently spend is larger than necessary. But the spender also won in that I limited the amount deducted from my account two weeks to deposit in the TFSA to $100.00. This way, if I spend on something “extra” in the month, I don’t have to suspend the automatic withdraw. It will take a while to build it up probably.
Anyone dizzy yet? LOL
When I was a little kid, I would go to the bank with my mom, and deposit my allowance or birthday money into a bank account and save it. “Doesn’t that feel good?” my mom would say and I would nod.
Then when I turned 10, I found out this amazing thing. It was *my* account. So I had authority to withdraw the money. In 2 days, I withdrew all my money and spent it all on junk food.
That’s pretty much my life in a nutshell. Amazing savings for one hell of a party…
Right now, the saver has tricked the spender into thinking that if I sock away all my money for the next 5 years, I could retire at the age of 46. Which is pretty delusional but technically possible — but like I said, the spender is kind of oblivious, so a slim chance is enough!
June 24, 2010 at 11:46 am
I fall into the saver category and find it really difficult to include things like entertainment in the budget. I understand the logic of having entertainment, clothing, and general fun money in the budget but it just doesn’t work for me. I know that if I go around thinking I have $x per week to spend on whatever I want, then I know I’ll find somewhere to spend it. By putting it in the budget it’s as if I’ve already given myself permission to spend it without really thinking it through. Once it’s in the budget I start to think of it as preapproved.
Instead I only plan for the mandatory spending (mortgage, phone, cell, internet, gas, property taxes, insurance and groceries). That takes about 55% of our take home. After that, theoretically all the excess cash goes on a weekly basis to our RRSPs and extra mortgage payments. This way I set the assumption in our minds that every cent that isn’t going to the basics is going to savings. By doing this it causes me to think carefully before I spend on anything else since it’s coming directly out of that big chunk we could be saving. Do we really need that item? Can my hair cut wait another week, or three? Why do I need a new shirt – did I actually wear out something? Can I get it cheaper somewhere else, or wait to receive it for a gift? Most weeks only the planned basics happen, and when we do spend on something else I have to manually add that item to the plan. It’s like documenting for all the world (ok just me) that I we strayed from the plan and spent on something extra. Of course a hair cut isn’t really an extra, but having to add it to the spending plan does make me put it off as long as possible.
We do occasionally go out or buy clothing, and replace worn out household items, but because we don’t budget for them on a weekly or monthly basis, we regard them as unusual extra expenses that need to be thought through carefully rather than done on autopilot because the budget says it’s okay.
Maybe it’s wierd but it works for us.
June 24, 2010 at 1:35 pm
I’m a careful spender and I also save. I certainly think there’s a problem with spending money on entertainment, fun things and new clothes if you owe other people money. This is especially the case if you owe family members. If you are debt free and have a good plan in place for later years, then you can spend more freely.
June 24, 2010 at 2:09 pm
oooh! reality check here; i am a spender from way back. learning to be a saver has been a process, but i’ve figured it out by making things automatic and really looking for ways to save. i shop the thrift stores for my clothing and only if i have cleaned out and already donated out of my own closet. truthfully, i don’t have much of a clothing need, so i’m fairly strict with myself there.
i also agree with those who’ve commented on the entertainment category. i keep that tight and only budget $10 or $15 a month. i have cable tv, and i can watch movies there. i love microwave popcorn, an inexpensive treat, and i rarely drink soda anymore (too much sugar substitute in the diet type). and my big go-out-to-dinner is pizza, so my budget amount covers that once a month. i am okay with that.
i do look for ways to save at the market, and carefully compare prices, brands, and shop by my list. however, when boneless skinless chicken breast drops to $1.49 a pound, i stock up. take a couple 6-breast packages, go home & divide them into freezer bags and i have lunch/dinner for many many days.
because i live by myself sometimes i think it’s a bit easier than having a family. i am responsible for myself, my savings, my spending. i have control & when that spender wants to take over, i step back & remind myself…i am in control. i have to make it happen, and looking for other ways to save is assuring myself a good, solid future.
geoff, good matches today. and cheers – netherlands on on!
June 24, 2010 at 2:22 pm
My mother used to say that “poor” people need to save with a nickel and a dime because a quarter they don’t have!…translation:…every penny counts!!..lol…I encourage ALL my clients to save SOMETHING…even if it’s only 25.00 per month…99.9% can save at LEAST that much!…there are so many saving plans/options available that everyone can find one that works for them…you can self direct some or all of it or you can get a “professional” to help…
@ GEOFF and STE…
HUP Holland HUP!!!!….I was in the Netherlands June 2 – 14…the orange craze was in full swing!!!!!…they do love their voetball!!!…and it’s impossible not to get swept up in all the excitement!!…lots of fun!!!
June 24, 2010 at 3:01 pm
STE, I must say I found it much easier to budget and save as a simgle person. When I only had me to worry about it was easier to focus on those goals. When I was single I also had less expenses – no mortgage, no car, gas, extra insurances etc. My expenses were more fixed.
Sparky, you’re right. $25 isn’t undo-able for most people.
June 24, 2010 at 3:04 pm
Was a spender, now a saver. Trying very hard here. I keep looking at my nicely drawn up budget for paying off our LOC (Nov. 30th is Totally Debt Free Day) and I get frustrated because it seems so far away. Each time I make the required payment I put a check mark beside the date and the amount…but, the kid in me wants to go check, check, check all the way to November 30th.
Speaking of kids (nice segue? ha) I wanted to knock some heads together when I saw teenagers walking back to the high school (they walk through the parking lot where I work) and they were throwing their change onto the street. Didn’t want it I guess. Don’t realize that every penny counts and that it adds up. Ok, so I picked up a couple of coins that rolled my way when they weren’t looking…..
June 24, 2010 at 3:59 pm
Just set up auto deposits for a nicely hefty savings right up front, on paydays. I’m having a bit of trouble adjusting to the giant sucking sound going out of my account the day after payday, but I’m getting used to it. It is really cool to see the savings account keep going up. It’s like the opposite of seeing my former debt balance go down! However, now I KNOW when I am getting close to spending my weekly allocations for food and entertainment, instead of being eaily able to dip into the excess for stupid spending.
I guess I’ll rename the giant sucking sound the “giant saving sound”.
Karen
June 24, 2010 at 4:00 pm
People I work with think that I’m a saver because I don’t spend like they do — but I will save, save, save, so that I can spend, spend, spend on that next reno or vacation… Realizing, of course, that I’m really saving NOTHING when at the end of the day, there’s still no money accumulated in the bank…
However, now we are actually starting to SAVE in the real sense of the world — save for an EF, RRSP’s and RESP’s…. we have a goal, but sometimes I wonder if we’ll ever reach it, and now I’m more panicked than before, when I had no goal… not liking this way of living either…
I tell myself “3 years, only 3 years” until completely debt free (mortgage and car loans; no LOC or credit card debts thank goodness)…
But part of me says, what if I started using the savings instead to pay some of that off…. sigh…
And now, 18 years married, and my appliances have conspired to all die…
I don’t do well with detours… they interfere with my ability to save AND spend…
June 24, 2010 at 4:17 pm
Catherine:
When I worked at the high school, lots of kids would do the same just throw their change. So, I picked it up and would spend it on coffee. So nice of them to buy me coffee.
Nancy!
June 24, 2010 at 4:44 pm
@Catherine and Nancy
I work with a woman who’s son used to pick up all the coins the kids at his school threw in the garbage!…added up to HUNDRED’s of dollars!!!!!!…..it wasn’t just pennies they threw away it was ALL coin!!..stupid stupid stupid…but the boy that picked it all up???…SMART SMART SMART!
June 24, 2010 at 5:05 pm
I have a little of both tendencies, but more of a spender than a saver. I have to automate my savings, preferably to a location that is difficult to access, otherwise I’ll feel tempted to spend it. But I have improved a LOT over the last year or so.
June 24, 2010 at 8:03 pm
[...] This post was mentioned on Twitter by Jayn Steele, 2 Cents. 2 Cents said: Saving is a Habit – http://b2l.me/595g3 via Gail Vaz-Oxlade <- Anyone can do it! [...]
June 24, 2010 at 8:06 pm
Nancy and Sparky~
Hm…hope this isn’t a teenage epidemic. The coins I picked up were nickels, dimes and quarters – so yes, they obviously don’t like coins of any denomination – not just pennies. Now, if they had been loonies and toonies – I would have followed them all the way to the school!
Seems to me if high schools had a large receptacle for them to throw their coins in – perhaps the money would be better spent on….say….something for the children less fortunate. Just my humble opinion.
June 24, 2010 at 8:25 pm
@ Catherine…I agree with you..it’s a good idea to have a receptacle for the coins…then it could be donated to someone who would APPRECIATE it!!….and yes, the boy I know actually picked up some loonies in that throw away money!!…crazy…
June 24, 2010 at 11:06 pm
Once we renamed our savings account to emergency fund, it became easier not to
touch our money. Before Gail, there was no such thing as an emergency fund.
Tks Gail!
June 24, 2010 at 11:21 pm
In my heart of hearts I am a spender, but I am proud to say that thankfully I have found Gail and her “12-step program” and I am working very hard at my saving habit. I am more conscious with my spending and question every purchase.
My co-workers see me saving, but then I also spend on vacations and reno’s without going into debt. I hate to take the money out of savings but I will NOT go into credit card debt. Our debts are mortgage and car loans.
I watch with interest the gobs of money that my co-workers spend everyday only to hear them obsess about not having enough money to pay their bills or to enjoy vacations, etc. I wish I could help them by my example, but they think that they are different than me and that they would never have ‘enough’ money to put into a savings account. *SIGH* I tell them about Gail’s show, tips, website, tools, etc. hopefully without “preaching” but they just are not ready to be honest with themselves and make that change.
We have RSP’s, and four other small savings accounts (each with it’s own designation); I have prepared several budgets, but have not committed to writing down EVERYTHING nor getting the ‘jars’ started. We have a goal to be mortgage free in less than 10 years. I know that we have a good chance of succeeding. However, I am still a work in progress.
June 24, 2010 at 11:55 pm
Kids tossing money away?? WTF?
Is it too heavy in their pocket or what is the reasoning?
I’m so confused!
LOL
June 25, 2010 at 8:49 am
Kids have not lived through lean times yet. That’s why a whole generation does not know how to save or the true meaning of money. Those lean times are coming up shortly as the ECRI and housing indicators are all pointing downwards. Credit contraction is still happening and the stimulus has now been turned off.
It’s going to be a wild fall when the trailing economic indicators fall off the rails. Then those kids will wonder where the money comes from when their parents are strapped for cash.
December 16, 2011 at 2:11 pm
[...] Gail Vaz-Oxlade Making Money Make Sense. Saving is a habit. “In the world of money, the basic categories we often use to determine what kind of financial personality you have comes from this question: Are you a spender or a saver?” [...]