What’s Your Excuse for Not Saving?
Posted by Gail | Filed under Saving
All the people who don’t save have a great excuse for not doing so. My favorites come from the people who just don’t want to stop doing what they’re doing. From the small expenses like a cell phone, buying bottled beverages, or dropping the odd $20 on new make-up, to the people who spend gobs decorating and re-decorating their homes, eating lunch and dinner out, or taking vacations, people are unwilling to stop spending every red cent they make. Do you have a gadget habit? Can’t resist a new pair of shoes? Do you pick up a new magazine every time you’re at the check-out counter?
Believe it or not, you don’t HAVE to get a manicure. And if you already own 10 pairs of shoes, the next pair is sheer indulgence. So is that bottle of nail polish, the new DVD, or the beer after work. Whether you’re a newbie nester who is determined to make her home a castle or a fast-foodie who drops a ton on specialty coffee, lunch out at work and dinner with friends every weekend, your spending habits are all distractions from savings.
You don’t have to start by saving a whack of money. If you’ve never set a penny aside, making just a small commitment today can make a huge difference to your financial future. So it doesn’t matter how little you have to start, the important thing is to start. This week, open up a high interest savings account and then arrange an automatic transfer to that account every month. Start with $50 and grow it from there.
Next, look for ways to find more money for your savings. If you’re currently shopping with a debit or credit card, shop only with cash. Do you know that most people find it more painful to part with cash? So cash makes impulse buys more difficult. And using cash removes the risk of carrying a balance on your credit card or going into overdraft on your account.
Choose who you shop with carefully. Did you know that according to research at the University of Alberta, shopping with friends means you’ll likely spend more to maintain your image. Unless of course, the friend you’re shopping with is like me and whispers, “Do you really need it?” while you’re contemplating your next buy.
Since overspending can be tied to a number of emotional factors, you’d be wise to avoid the stores when you’re blue, stressed or even dieting. Self-denial on the food front can lead to over-spending on the clothing and gadgets front, so be careful not to substitute shopping for eating if you’re hell-bent on losing weight.
If the biggest barrier to establishing the savings habit is your sense that you don’t make enough to save, think again. Of the couples I’ve worked with, those with a higher income are no more likely to save than those who make less. Savings isn’t just about money. It’s about attitude. And without the commitment to having something in the future, the amount of income you earn has very little to do with long-term savings success.
While you’re out merrily shopping away, keep in mind that while our financial behaviour doesn’t always mirror that of our parents, our habits have formed as we’ve observed what they’ve done.
Who is observing you?
August 20, 2009 at 8:15 am
Excellent post!…I encourage my clients to treat their savings just like another bill…it’s just as important to save as it is to pay for their gas hydro etc…after all the bills are taken care of then they can spend on the extras…it’s an easy painless way to build up your savings…start with a small amount that’s really comfortable…once you see it start to grow you’ll begin to look for ways to add to that amount…guaranteed!..:)
August 20, 2009 at 8:20 am
[...] families will simply adapt to the new reality and boost their spending. Also, how true is it that family budgets are so lean that there is no fat to trim? According to the Statistics Canada report on Spending Patterns in Canada, families in the middle [...]
August 20, 2009 at 8:37 am
This is so great! My husband is the saver in our family so we have, or should I say, he has our savings account in his name so I can’t get to the money…..smart man. We have included a regularly monthly deposit to this account in our budget. It’s amazing how fast a savings can grow if you don’t spend it. Thanks Gail for another smart investment idea.
August 20, 2009 at 8:48 am
[...] Original post by gailvazoxlade.com [...]
August 20, 2009 at 9:05 am
I’d give the advice to just stay away from the damn stores and rediscover what life is about beyond being a boring consumer!
August 20, 2009 at 9:08 am
You are so very right, Gail (again!) We have automatic savings set up so that on payday, it comes out and we don’t have to think about it. We have savings for RRSP, emergency, RESP, and vacation that are growing without having to scrimp.
On another savings note, for those with kids, ING Direct has a deal right now (until Sept. 30), that if you open up a savings account for your child with a minimum $100, they will give you $25 in it! That’s a great deal! I plan on opening one for each of our daughters so they can learn how great having a savings account can be!
August 20, 2009 at 9:25 am
Another great reality check. I’m all for making it automatic, so you don’t even think about it. Yeah for online accounts like ING-the money just comes out each week without me even getting a chance to be tempted.
August 20, 2009 at 9:29 am
And this is why people hate shopping with me. Yet, my name is always the one that pops up first when they need…financial assistance.
August 20, 2009 at 9:44 am
I’ve found that not only does using cash makes me think twice about spending, but having money in the bank makes me very reluctant to part with it. I really hate seeing the balance go down, even if it is just to buy what the money was intended for!!
I don’t need any one to ask “do you really need it” because for the last 8 months I’ve had Gail looking over my shoulder.
August 20, 2009 at 10:01 am
Don’t just stay away from stores…stay away from online stores too! Reconsider that $12 movie a friend wants you to go to. With popcorn and a drink that movie ticket will end up costing you over $20! Rent instead, or take home cooked food to the park and have a picnic and play frisbee. Ride your bike on the most scenic route in your town or city, use the gym in your condo or office building for free instead of paying for a gym membership, call up a friend and catch up on the phone…
So many things you can do for free that still do a body and a mind good.
August 20, 2009 at 10:58 am
My hubby and I picked up a tip on another website – we try to have as many “no-spend” days as possible each week. Some people count any day in which you have spent less than $5 a no spend day, our day has to be literally no money spent in order to count. Part of it is organization, making one day errand day, making sure that lunches are ready to go in the morning, it has become a slightly competitive game with us, which can only help the situation!
August 20, 2009 at 10:59 am
“TK says:
August 20, 2009 at 8:37 am
This is so great! My husband is the saver in our family so we have, or should I say, he has our savings account in his name so I can’t get to the money…..smart man.”
TK,
Please make sure the savings account is in both names. Otherwise, technically only your husband has access to the account and the money.
If something happens (ie divorce or death) you will not have access to this money at all. In case of death it would go to his estate, not directly to you.
What you could get is an savings account that require 2 signature to withdraw. This way it will keep the “spending monkey” at bay, but still protect you.
August 20, 2009 at 11:04 am
TK:
Do you have a savings account in your name? I think it would be a wise idea to have some money for just you– otherwise, it could be a problem if things get rocky, which obiviously people dont want, but its good to plan.
Even if someone is on a very limited income, saving even just a few dollars, automatically, adds up. I had a friend who I constantly heard ” with what money?!” and was able to have him transfer a few dollars every week into a savings account. After that, some of it would be transferred into an RRSP and a TFSA– it soon adds up. Yes a very limited income, but he found he was spending less money on “stuff”, and allowing him to be more financially stable in the future.
I also find for people who have troubles in finding out where the money is going, CIBC has a terrific analysis of spending habits on their Visa statements, looking at where the money was actually going. So far, I have not found this on the TD statements.
I too have found that I hear the “” with what money?!” often– and that some money could have been used differently, its a tough situation. I generally just keep my mouth shut, but at what point does a want overcome a longterm need? I find, for myself for example, if I transfer even just a few dollars a week, ( I work part time and am in school), I save. I also watch deals to get a good price, but dont do this like a hawk. I will spend if I knew I was going to purchase something already, and it was a better price. An example.. I found 2 Nigella Lawson Cookbooks and a Delia Smith bookbook that I had my eye on, all $50 each at Indigo.. ( all british authors) plus a fiction book.. and was able to get them all for $50 . Now, I would have bought them at Indigo, but decided to wait. It wasnt planned spending, but I know that I wanted the cookbooks, and probably would have bought them at a higher price had I not decided to hold off at that particular time a few months ago.
August 20, 2009 at 11:34 am
Automatic money transfers are the key! I did that once I got a ‘real’ job after I finished my schooling. I was not used to a decent paycheck before, so it was easy to set up.
Sources of easy money transfer set up:
1- $5/week and increase every month until you reach $100/month.
2- Net pay increase.
3- CPP/EI contributions that stop for some towards year end.
4- Tax refund.
5- Money gifts.
6- Left over lunch money for the week.
Remember that if it is easy to spend $5 on a magazine, it is easy to save it as well.
Another idea: Every time you go out, put an equivalent amount of money in a savings account. Yes, you are allowed to go out, just be selective.
August 20, 2009 at 12:48 pm
I have for years been saving for Christmas so all expenses are paid with cash and not credit. I have a savings plan through my employer however I have only began saving this year with a low amount & am a pleased to say that it is growing.
I also look for sales however only if I actually NEED the item versus wanting it because it is at a good price. I bring my lunches at work & I am known to be a scrooge through my colleagues & family my spouse & I do not have much consumer debt($10000)other than mortgage & I intend to pay that off within 18 months & then put the amount of payment towards my savings. It is a GREAT FEELING to be more frugal with our money.
Thanks Gail, love your show & this website…
August 20, 2009 at 2:19 pm
I like Michelle’s “no spend” days. I do it myself and am amazed by how much “stuff” I avoid buying (i.e. soup, magazine, etc.) On the days where I absolutely have to spend money, such gas for my car, I make a list of other necessities that I need to buy (i.e. groceries) so that I can make my purchases during the same run. That way, I’m not forking out cash every day to buy this or that.
August 20, 2009 at 2:33 pm
What’s Your Excuse for Not Saving?…
All the people who don’t save have a great excuse for not doing so. My favorites come from the people who just don’t want to stop doing what they’re doing. From the small expenses like a cell phone, buying bottled beverages, or dropping the odd $20 on …
August 20, 2009 at 3:01 pm
I, too, was part of the ‘I don’t have enough to get by, let alone save’ crowd until the not too recent past. It’s taken a lot of years for me to start ’seeing’ what I could do with my money…little things that can add up. I’m definitely a work in progress and wish I had had this Gail revelation years ago.
When my oldest son starts his first part time job, I will kindly and benevolently begin his “Save 10%” in an account to not touch. Hopefully I can instill a strong habit in him for when he’s on his own.
August 20, 2009 at 3:43 pm
Thanks for the kick in the pants.
While we’ve done a ton over the past few months after reading your blog and watching the show–disability insurance, creating a budget and tracking system like the jars, emergency fund in one the the new Tax-Free accounts–I haven’t yet set up the automatic savings program with our ING accounts. Our final car payment is next week, and then we are completely debt-free, other than the mortgage! Off to set up both “savings savings” and “planned spending savings” automatic transfers.
Oh, and yes Michelle, the no spend days work beautifully. We shop a maximum of 2 days per week now (mainly for for groceries) and we sure noticed having a LOT more money in our account at the end of the month. Another “trick” we’ve been using is making a budget based on monthly amounts (Gail’s worksheet), but putting the money in only on the 1st, 8th, 15th, and 22nd. It means at the end of each month we need to stretch for 2 or 3 extra days–but it works out to 2 weeks worth of expenses saved each year. And most of us can stretch a couple days here and there much more easily than saving up 2 weeks worth of expenses in one go. Woot!
August 20, 2009 at 3:57 pm
jolie,
Why only encourage your son to save 10%?
I think kids who still live at home should be saving 60-70%.
Think of the compounding benefits over 50 years!
My parents did this with me and threatened to charge me rent if I didn’t save that much. I thank them for it!
August 20, 2009 at 4:58 pm
Totally unrelated, but this might be interesting for those who like to know.
http://www.visualeconomics.com/how-the-average-us-consumer-spends-their-paycheck/
August 20, 2009 at 6:38 pm
Thanks for the link ComputerHero. It’s a very pretty pie chart. I find it interesting that the percentages add up to 100%. Really? The average US consumer only spends 100% of their paycheque? The average US consumer doesn’t overspend? With all the personal debt that’s out there? After watching TDDUP, I’m sure there’s much more spending going on!
August 20, 2009 at 6:43 pm
I don’t quite understand no-spend days…. If I do a load of laundry, then I have spent some money on utilities… is it really a no-shopping day?
Automatic withdraws work well for us… Some goes to RRSPs (twice a month) and another smaller amount goes to the emergency fund every month. By treating as a “bill” I take it more seriously and pay ourselves first.
I make sure the kids are aware of my bill paying and our active saving efforts… life takes money, even the boring stuff.
August 20, 2009 at 8:20 pm
??
I have a question for you all regarding saving for kids education.
I would like to put aside some money for my daughter’s university. It is still a long ways off as she is just turning 2.
In order for her to learn responsibility and accountability, we will be telling her that she will be responsible for her own cost of tuition, books, etc. However she will be able to live at home as long a she is going to school.
We are against putting this money in RESP because it is tied to post secondary education only, plus it is will technically be in her name. This creates a possible issue as we do not want her to rely on this money. We would like to keep it under our name, but then there is tax on the interest for that. We cannot put it into TFSA as we have already maxed out. We will not be telling her that we have set aside money for her education, as we really believe that kids appreciate and push themselves harder in school if they have to pay for it.
There is always the possibility that she will decide not to go to universit or any post secondary, another reason why we do not want to put it into RESP.
Once she can prove to us that she is can do this on her own, we will help her pay off her education (if there are any loans) or use this money essentially to help her get started once she is out of school.
PS>Before any one flames me, this does not mean that we will just let her drown if she runs into money problems, just get her to understand responsibility and accountability.
Thanks in advance.
August 20, 2009 at 8:34 pm
Michelle, your no-spend days are like the old “tv turnoff days”. I love it! I’ve had three “no spend” days already this week. I don’t count work-related expenses though. I am a freelancer working from home. Sometimes I just can’t delay mailing that parcel or getting those photocopies. All within reason, right?
August 20, 2009 at 10:30 pm
Id;
I don’t believe that you have complete understanding on how a RESP works – although the money is tied to education – you get the grant from the government as well which helps with saving -the money is in trust for the children with you and your husband as “owners” of the account. However, in the event your child(ren) does not go to post secondary school – and the account can be left open until at least age 25 of the youngest child I believe (you’d have to double check that age) but if they don’t go to school you are able to transfer the funds into your and your husbands RSP (providing you have room in your contribution allowance) less any of the grant money from the government – but you keep all the interest earned/growth on the money provided from the government – they just get the principle/grant money back.
Search through Gail’s sight – she has info on RESPs which you may find helpful.
I suggest you look into RESPs a little further. My husband and I have a family account (since they will be likely attending univ/college at the same time it made sense for us) for our twins in the event they go to post secondary schooling there will be money in the account – however, since we are joint owners of the account we can transfer the funds to our RSP if the funds are not used for schooling. Our names are on the statements not our children’s – although we did have to provide their names and SINs to set up the RESP account as an RESP to get the government grant.
I had university paid for by my father, so did my sister. I paid for books, extras and my transportation to and from school. I worked harder at getting my degree because my father WAS paying for it – the last thing I wanted to do was disappoint him. Not all children are going to believe that it is a free ride – I certainly didn’t. If you teach your children the value of an education along with all the other things you plan to teach her you might find yourself pleasantly surprised.
August 20, 2009 at 10:32 pm
oops “site”
August 20, 2009 at 10:37 pm
http://gailvazoxlade.com/blog/archives/tag/resp
this is the link to gail’s info on RESPs – its worth a read …
August 20, 2009 at 11:32 pm
*pol, I think the way “no spend days” are usually used are like “buy nothing days” – tracking your ability to stop shopping. They don’t refer to your cost of living – utilities, rent, food, insurance, etc. For everyone but those living in absolute poverty, we spend some money every day, at least on fixed costs. But we can cut back on spending on variables like entertainment, clothing & gifts, and various other expenses. No spend days are really tracking your ability to stay out of the stores completely!
August 21, 2009 at 1:06 pm
Thanks for the reminder. I’m already on a tight tight budget, but I went into my online banking and set up automatic transfers of $50 from my chequing account to my high interest savings account. I did this for my next nine paychecks. (until the end of the year) I hope to boost my savings up to $200 once my credit cards are paid off, which will be November or December. Eventually that money will be sent to my ING TFSA. I just need to make the initial deposit and finish getting it set up.
Sometimes I get so caught up in paying off debt that I forget to save and I think in ten years I will regret not starting some sort of savings with compound interest. Even small amounts add up over time!
August 21, 2009 at 4:30 pm
Hi
I have been away from the computer for a couple of days but Saver Queen has described it perfectly. Fixed expenses are allowed on “no spend” days, they are meant to stop the mindless spending that add up all too quickly. I find it alters my mindset a little bit, I will make dinner with what I have in the cupboard rather than run to the grocery store to pick up just one thing, or not pick up a treat while out for a walk. Last night my husband and I were out for a walk and were feeling the need for a treat – before the no spend competition we might have stopped for an ice cream whereas last night we came home for fruit and yogurt!
It seems a little silly but if it works….
August 24, 2009 at 8:59 am
Meredith, yes I do have a savings in my name and I contribute to it monthly as well.
September 25, 2009 at 3:01 pm
Hi Gail,
I just stumbled across your blog today via a link from Fabulouslybroke.com. I have been entranced for an hour since. After paying off a large debt, I started saving regularly and managed to accumulate about 7k but recently decided that this money would be better used to pay off the old Credit Card in one lump. Now I am floating with little savings (until the next pay cheque) and it is a very uncomfortable feeling. I love shopping and daydreaming knowing I could afford $3000 for (x|y|x) but, (x|y|z) would not make me as happy as having the money and the choice. I can’t wait to build my savings back up to *happy happy choice choice security*