Saving money can be a challenge for any of us at the best of times. However, even a small change in your daily habits could boost your savings potential ten-fold. Here are 7 habits you can adopt to save more money.
1. Learn the difference between saving a $ vs. %
Saving 5% on an item which costs $100 is much better than saving 5% on an item that costs $10,000.But in order to process decision problems at different scales, the brain tends to normalise things so the two cases appear similar.
You should spend less time worrying about saving 20 cents on a grocery item, but spent a lot of time thinking about what car to buy and making sure you get a good deal on it. You can buy a lot of spaghetti for a $4k discount on a car, and yet there are people who spend lots of time on grocery coupon clipping but never stop to consider whether they could move to a cheaper unit or house or drive a cheaper car.
2. Practice Delayed Gratification
When you are shopping and your heart leaps at the sight of something, and you think it’s love at first sight…WAIT. Save it, bookmark it. Come back to it hours later, then a day later, then days later and gauge, each time, how or whether your level of “pumpity-pump” interests stays the same, declines, etc. Never buy on impulse. Sleep on it. Ask yourself: Do you think it’ll make you happy a month from its purchase? A few months? A year? Years
3. Do a little math while you shop
When you’re at the shops, try to figure how much that amount of money would grow to in 5 years at a rate of 10% per year. That comes out to a little more than 60% return.
E.g. if you were to buy something worth $1,000, you should ask yourself: Do I want this thing now, or would I rather have $1,600 in five years?
4. Track your spending
There are some really great apps to manage and track your spending. Two that come to mind are Pocketbook and TrackMYSpend. They can send you free alerts when you get low on funds, as well as give you an idea of your spending trends.
A lot of banks let you automatically pay bills, both to companies and to individuals. Take advantage of this — it is free and requires almost no effort.
5. Spend only the money you have
If you don’t have the money in your account don’t buy it. Credit cards tempt you and trick you into thinking you have the money when you don’t. Before you know it, you’re stuck paying back debt, not to mention the horrible interest. Avoid paying any interest on, like, anything. If you already have debt with interest, that is your number 1 priority to get rid of.
6. Use the 5-question rule
Want or a need? Do I need it? Do I see myself using it? How often? Is it worth the time?
Run these questions every single time you’re buying something.
7. Be happy with what you already have
Possession of ‘things’ is a race no one can win. Learning to want the things you already have will save you an incredible amount of money.