How do you become a saver vs. a spender?

[greenmom4]

My h has just found work, which has doubled our income (not take home, since we have to pay for childcare, but we're still coming out ahead). We don't have any debt to speak of, but we are terrible w/ saving $. We tend to spend every last cent to whatever is the priority at the moment. I have done a budget but aside from the things that we *have* to pay, I can't say I stick to it very much. Does the glass jar thing/envelope system work well? I really want to start saving aggressively but my h and I are both crappy at it.

[Cheshire]

Automatic deductions from your account as soon as the paycheck hits.

We have an auto deduction for our savings account set up to match our paychecks. I know it's coming so I'm able to budget for it but I don't ever "see" the money so I don't spend it.

Once the money is actually in our savings account it has to be an emergency for me to pull it for anything so it's pretty safe from spending hands once it's socked away.

Also, now that I'm used to saving I have a game to see how much money we can wrangle to have at the end of the month and then I transfer that lump sum over into savings. It's a great feeling to see it grow.

Good luck - you're doing at the right time so you don't let your spending grow to match your new income. Do it before you feel it. Whenever we get raises I add those to our auto deductions so we don't spend the raises. Another nice way to help our savings grow.

[zinemama]

As soon as the paycheck comes in, I put portions into regular savings, college and retirement funds. I don't have it set up automatically because I like to do it myself. But it sounds like auto-deduct might be exactly what you need. Decide on the amount and have it set up.

Also? Avoid Target and other big box stores where you're tempted to buy stuff you didn't set out to acquire.

[Hannah32]

Definitely use the "pay yourself first" principle. It can't lead you wrong, especially when you are debt free. It's really the highlight of my day on those days when I get to transfer money to my linked account. I even get up early to do it! LOL. For those who wouldn't get the same rush (probably all the sane people), you can do the automatic thing.

[KellyAnnW]

We use automatic deductions for savings, investments, bonds, and a cash envelope for expenses. Sometimes all our best laid plans get shoved out the window but generally it works. I try to save dh's raises and not increase our standard of living.

[crunchy_mommy]

Automatic deductions as everyone else said... Also, have a set amount of money for non-necessary spending and only use that money each month. If you use cash to pay for everything necessary, then try a debit account for non-necessities (and vice versa -- if you use credit/debit or checks for everything necessary, then take out a set amount in cash each month and ONLY use that for all the non-essentials).

[ambersrose]

Hey Kim! I have always had a hard time saving too. Angel and I recently read the book "America's Cheapest Family" (It is available at the local library) and it helped us with some basic budgeting skills that we were lacking.

[p.s]

REALIZATION

realization that:
- people that care about what you look like/ drive/ wear/ hobby are NOT IMPORTANT

- that American society has brainwashed its citizens into thinking that >> spending money = happiness
having a big home = happiness
having nice clothes = happiness/ sexy/ desirable
having a sexy car = happiness

- being independently wealthy means you are NOT BEHOLDEN to the guy/ business/ corp that gives you the money.

- being not dependent on someone, means you are MORE FREE.

- keep the BIG picture in mind.... >>> then it becomes easy to save.

[Shellie]

It's hard. I think it's definitely a matter of placing more valuing on having the money saved than getting whatever you are buying with it, if that makes sense.

[_betsy_]

Stay out of stores for a month. No mall walking. No window shopping. Nothing but food shopping, and then not every day/couple of days but twice a month, with a list. No eating out, no going out to dinner and the movies just cause that's what you always do on Saturdays, you know? Institute Family Game Night, Make your own taco night, etc.

Write down every penny you spend each day. You might be surprised where it all goes!

And yeah, direct deposit of paychecks, and auto deductions set up to pay for everything (including a set percentage/amount into savings) is awesome. You can't spend what you don't see.

But you both (all) have to really be on the same page.

[eirual]

For me, money easily floats away if it's not assigned somewhere or if we don't have a plan.

Just setting a goal and maybe keeping track with a visual organizer might help. Automatic withdrawls I think would make that process easier, but aren't necessarily necessary, especially if the amount you'll have to contribute varies every month. Of course, you could set up a minimal amount, then add to it each month.

I think saving will be much more difficult than paying down debt is for us. I guess the same principles can be applied though: save for little goals, have a plan, and keep those goals in mind.

ETA: ENVELOPES drastically reduce the amount of spending you do!!! In being compartmentalized (gas, groceries, childcare, personal care, family activitiy, clothing, gifts, and whatever else you need for the month) it means you've already set out a plan and once the money is gone it's gone (if you commit to not using plastic), so it's much more difficult to spend more than you planned. There's a drastic difference between the amount I can spend when I have "free" cash on me or a debit card. Every little whim or "need" can be satisfied. When you're living purely on cash, you realize that you DON"T need/deserve everything you think you do. The savings are huge!

To start, you may just want to track your spending for a month- save your receipts or write it all down. Then you'll know where the money's going and what envelopes you'll need to live that first month on cash. And it takes some time to figure out the system and figure out what you need and how much where, but even if you get off track with the outline, there was at least an outline, and it won't be nearly as far gone as it would have been without one!

Good Luck!

[greenmom4]

Thanks, everyone. I think envelopes or jars or whatever will help us a lot in the short term. Plus I need to be better about putting $ in savings first. There's no excuse really. We're not "fancy" people, so it's hard to cut back too much - there aren't any malls here and I don't really buy "stuff." We rent a pretty reasonable condo, no car payments, we don't eat out, etc, etc. I think the money is already there it just gets...lost. That and I can spend on food like nobody's business.

I'm going to try and write down what we actually spend and then budget. I think I've been doing that part backwards.

Thanks again, we'll get there!

[nd_deadhead]

I agree with the others - set up an automatic payment to a savings account. I get a raise every year, and I usually increase the amount to savings by the amount of the raise - I'm already used to living without it!

And tracking literally every single penny is a fantastic (and simple) tool! I've been doing this with a notebook for 25 years, though using a spreadsheet or financial software works too. I mean every penny! A candy bar from the machine at work, a haircut, a movie rental - everything. Try to separate out groceries from household goods like shampoo and toilet paper. You might be shocked at the end of the month to see where your money goes!

[artemis33]

I agree with the PPs, with a couple things to add.

First, if you know groceries are a weakness (they are for me too!), meal planning can help a great deal to eliminate waste. I do about a week at a time, take inventory of anything I have that needs to be used up quickly, build in flexibility to switch things around or use things up as needed, and make sure at least a couple meals are pantry/freezer based so that if something comes up those meals can be pushed out to the next week without anything going bad. I try to take advantage of sales on things we use all the time, keep a stocked pantry, and shop seasonally as much as I can. I use leftovers on most days for lunches.

Another thing - give yourself and your DH an 'allowance' each month that you can spend on whatever you want. This really helps with feeling of deprivation when you are making these transitions.

I'm still working on this, and thank goodness DH is better at it than I am, but these 2 things have helped me a great deal. Good luck!

[prone_to_wander]

We do automatic withdrawls AND we have a weekly budget.

We both get a certain amount each week and that is it. That money pays for transportation, our cell phone bills, eating out, movies, clothes and any other discretionary spending. We get it in cash (mostly because cash is the most useful here in Hong Kong) and it helps me to look in my wallet and see how much I have left to spend. I love spending money and it helps me visualize how much I can spend.

We also put groceries and other essentials (dr visits, insurance) on our visa so we can track it.

[PPK]

I've been tracking every penny for the last 6 months and then entering the amounts into a ledger/budget book that I assgned various areas: Groceries, eating out, eating out work-related. work expenses, home maintenence, supplements, medical, insurances, rent, utilities, etc. Its been super helpful to see where I'm spending and it eliminated most of my frivolous spending within a month or two.

I read and followed in detail "Your Money or Your Life" book and its really helped change my relationship with money. Alot seems like common-sense, but I guess I needed to actualoly go through the steps to put it all into practice.

Also, groceries are my worst area, consistently! I started to make lists of the groceries I get at different stores (Whole Foods, Stop and Shop, Asian Market, etc) and then keep in the car and at home and highlight what I need before entering the store. This has helped me alot in not forgetting things and thus avoid going in within a day or two. I do fine if I go once every 7-10 days to each store, this way I can get fresh produce as well.

As far as savings, I'm just starting that so no real help! I'm going to try to "plan ahead" for expenses I now will be coming up though. I want 2500 for car repairs and other random things that might come up. Then taxes for the end of the year. Then 6 months living expenses. Then a new car fund, then start towards a down payment for a home...its alot to go for, but these are alot and will start slowly.

HTH!

[Shakti77]

Originally Posted by greenmom4

Plus I need to be better about putting $ in savings first. There's no excuse really.

This is why auto-withdrawal to a separate savings account works. You don't have to remember (or forget!) moving money to your savings account.

I think the money is already there it just gets...lost.

There's Parkinson's law that says Work expands to fill time. Similar to that, I think expenses grow when there's money sitting in a checking account unused.

That and I can spend on food like nobody's business.!

Me too! As soon as I enter a natural/health foods store, I'm like a kind in candy store. What works for us, is set up a limit for the monthly food+household expenses and stick to it.

I'm going to try and write down what we actually spend and then budget. I think I've been doing that part backwards.

Thanks again, we'll get there!

If you use a lot of credit/debit cards, it might be easier to pull a report from your bank accounts and use MS Money or Quicken to manage your monthly expenses and savings. We use Quicken and can't recommend it enough. We didn't pay for it, it came with our computer.

And yes, You'll get there, real soon! Wanting to save is the first step! Good luck!

[dachshundqueen]

I think for some people you just have to hit a point in your life where you're tired of having an empty checking account and nothing to show for it.

There are lots of great savings and investment products that don't require high initial deposits and allow for small weekly, bi-weekly or monthly automatic deductions from your checking. Many companies offer enticement money to start a savings account, although you have to leave the money there for a set period of time, once that time period expires the cash is yours (although you will have to pay taxes on it). I found that was a good way to get a quick boost to the "savings idea" for me.

Liz

[EFmom]

I agree, automatic payroll deduction is the way to go.

It also helps us to have money put in accounts that are either difficult or impossible to casually dip into. So, we deliberately have a savings account that is not linked to a debit card and is physically located in a place we don't often go. We also have always had money deducted for a 401 k type account.

[greenmom4]

That's one thing I've got going, I do contribute 12% to retirement; I figure if nothing else, that's a good step.

This is the first week for automatic deduction to savings. I'm really excited. I'm starting the envelope system this week, too, at least for a little while until it becomes habit.

Thanks so much, everyone, I'm really excited to get this going!