Financial Awareness: 4 Steps to Develop a Habit of Saving

Saving money is a skill that will be useful to both wealthy and not very wealthy people. To save a decent amount, you need to save about 17% of income. This amount is considered optimal to form a budget, and at the same time, 17% don’t cost a pretty penny. The problem is that saving is difficult, and spending is always pleasant because we enjoy shopping. It is not so easy to save a certain amount, especially if you are used to living in the moment and haven't ever thought that it would be worth putting aside a thousand, or maybe two. Today we’ll talk about how to save up and develop the habit of saving money.

1.       Start with a certain amount

Popular financiers, such as Suze Orman, Clark Howard, Dave Ramsey, give the same advice that will help save money. First, you need to set the amount that you will strive for, for example, $15.000 and then think about what you will spend this money on. It must be something for which you will be ready to discipline yourself. When you have the sum, the specific goal, you will know where to go, and setting a goal is the first and most important step. This is the basic starting point for developing a habit of saving money. Over time, more motivation will come. Saving money is about discipline.

2.       Put aside a little every day

To forge a habit, you should regularly repeat the same actions. Start putting money aside every day. For example, put aside $1 a day, just to forge the habit of doing that. Social psychologists explain that a habit is strengthened thanks to associative means of rewarding that gradually and slowly form and create a habit. Through the repeated connections, the cognitive associations between signals and responses to these signals are gradually strengthened, so people are ready to repeat the same action when they again run into contextual signals. So, to create a habit, you have to save up every day.

3.       Use smart cashback services

Many people do not take them seriously since such services return 1.5–5% of the purchase price. Yes, on the one hand, it’s not a big deal considering total spending, but on the other hand, money appears out of nowhere, and you can save up a decent amount over time. This can be either regular cashback or discounts or gift items. So, you can always open the mobile app, for example, select the kitchen you are interested in and view the proposed options.

4.       Make your savings visible

The first two tips relate to the process of forging a habit, and the next two will help support this endeavor. Research suggests making habitual activities and rewards visible. When you learn to drive, and at some point, easily start moving uphill, the skill becomes a reward of perseverance. With savings, things are the same: if you save money in a glass jar, then over time you will see the result of your efforts. Visible signs of progress motivate and support in any undertaking.

If you want to learn how to save, you should start spending less. When you learn to control expenses, you will look differently at your income. That control is crucial in this matter.

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