Let's be really straightforward here: savings are important. Savings aren't just important, they're LIFE-CHANGING! You know this. I know this. Every financial expert in the world knows this and shouts it from the rooftops. So why are so many of us so bad at it?
Well, one is just developing the habit which, honestly, any of these methods are going to help you with, so let's not worry about that. Let's worry about what's really happening in your bank account. We're bad at saving because:
- if the bills are barely getting paid, where is the extra cash coming from to put into savings? Or....
- now the bills are getting paid and we have some extra cash, but life has been on hold for so long we feel like we deserve to live a little. Or....
- the bills are getting paid, we're getting to indulge a bit, so why worry right now about building up the savings? We're doing ok, we're going to keep doing ok, so we can start tomorrow.
Any of this sound familiar? I'd be shocked if it didn't ring at least a little true. It certainly does for me. I have fallen into every single one of those thought patterns. Am I proud of that? No. But I might take a little pride in it if I can use these lessons to help you stay out of these traps (or work your way out if you're already there). Remember, I'm not a financial expert. I'm just a person who's right there with you, making the same mistakes, feeling the same stress. So I'm sharing what works for me.
Let's start with the scenario that makes me feel the bleakest: you are just barely covering the bills. The key here is to start small and stay small. So you're paying your bills and doing ridiculously extravagant things like buying ramen with what you have left. When you look at your bank balance at the end of the day, you have pennies left. What are you supposed to save?
The pennies.
And you don't even have to save all of them!
Hear me out on this. Day 1, you save $0.01. Day 2: $0.02. Day 3: $0.03. Every day, you save one penny more than you saved the day before. And you do this however is right for you. For some of you, it might be better to have a jar in a corner so it's not attached to your debit card and easy to "borrow" from. However, if that gives you too much anxiety, then transfer it electronically to your savings account. But don't touch it! That should be easy enough to do since really for quite a while the amount is not even going to be big enough to be impactful for you. The great fact about this method is that the most expensive day is only $3.65 (and trust me, I get how major that is when you're living paycheck to friends' paycheck because you had to borrow money from them to make it the last couple of days). But look at it this way: the first several days you can save money just buy picking up a penny someone else dropped on the street. Seriously! You walk around for a few minutes, I guarantee you'll find at least 5 cents on the floor. This is very convenient if you're saving by just throwing the money in a jar. But you know what else is awesome about this method? I'm giving you a printable table that you can post somewhere you can see it every day. Because remember: half the battle is establishing the habit! Even better? No one says you even have to go in order! Today, you are flush with an extra dollar? Throw it in the jar and mark it off the sheet! Tomorrow you find a dime on the ground? Throw it in the jar and mark the 10 cent spot off!
Your reward for all this diligence? Close to $668. Crazy for pennies, right?
Now a note/warning: I know some of you are going to go the electronic route, so I've put the weekly total at the end of each week of savings just to make it simpler. But I implore you to not actually transfer only weekly. Why? I guarantee you there will be weeks where the idea of transferring $12 and some odd cents is going to hurt. You'll put it off and put it off until the next paycheck or whatever mile marker you mentally set and next thing you know, you're behind $50. This defeats the purpose of this method. You're transferring a little bit every day in a way that doesn't hurt too much so you can have a great payoff at the end of the year! Pay yourself in effort and soon you'll be able to pay yourself in cash!
Download 365 Days of Savings (365)
But wow: You're looking at that table and now and you're feeling like maaaaaybe this is too lofty a goal. After all, if you go in order, those weeks start getting pretty expensive. I get it. I've been there. So for you I have made a different chart. It works the same way at the start, but your most expensive day is only $1.83. After that, it starts decreasing by a penny every day. Now of course the payoff isn't as big at the end, but it's still almost $335, which is not bad at all! That is a respectable start on your savings journey! Of course I apply all the same thoughts, concepts, and caveats to this table, so if you got frustrated by the other one and just skimmed, go back and give it a good read-over.
Download 365 Days of Savings (01 to 01)
As you may have noticed, this is just part one of the series. Do you fall into the second category of budget where you're feeling a bit out of the woods and would rather spend your money (FINALLY) than save it? Well just click here and check out a plan that is a custom fit for you!