As you saw in Part One: Not winning the lottery we aren’t especially awesome at saving. But due to the fact that we have not as yet won the lottery it has proven to be the only way that we can afford a trip like the one we have planned.
Saving money is far from being glamorous. It is actually rather dull. To be honest, we wouldn’t have done it if we hadn’t tricked ourselves into it.
So here follows our Top 10 tips to trick yourself into saving:
1) Savings come first
This one has been the most important for us. If we have access to money, we’ll spend it. We seriously have no willpower.
So we set up a separate savings account and arranged an automatic payment to pull out our savings as soon as our pay checks went in. The savings account is a one way door, money goes in but no money ever comes out. Somewhat like investing in an email scam, but with a happy ending for you, the scammers don’t get your money. That way our trip savings was never available for us to spend on beer or cheese.
2) Create a budget
Technically this is something you should do first. Before you set up any automatic payments, you need to figure out what you can actually afford to save. We’ve put it in position number two, because for us Tip One was the big one, without which we wouldn’t have savings. But that shouldn’t diminish the importance of having a budget.
We had to figure out where our money was disappearing to each month in order to decide where we could cut back and how much we could afford to save. Once you see where your money is disappearing, this (sometimes depressing) knowledge really does help to trick you into saving.
3) Keep track of the budget
OK, so this sounds deceptively like we’ve just repeated Tip Two again. But this is really a separate and equally important task. It’s all well and good to write a budget once to figure out how much money you need to save and then forget about it. But trust us, if you don’t keep checking back on the budget things can get out of hand.
We tend to tell ourselves that we’ve been well-behaved and stayed within the budget, but we conveniently forget about some of the money we have spent. There has been a couple of extra trips to the supermarket for fancy craft beer that would have slipped our minds but for that damn budget.
How you choose to budget is up to you, but we found it best to sort fixed costs from discretionary costs and focus month by month on incrementally reducing the discretionary spending, so that we could increase our savings or afford to do other things simultaneously such as renovating our house.
Keeping a record of everything you spend can be a bit of a drag, we decided to use some budgeting software to give us a hand. We use YNAB to track all our spending and set our monthly savings goals. It’s a handy-dandy way to keep track of upcoming expenses and budget for them. It makes it easy to set aside a bit of money each month so that when your annual insurance payment comes out, all the money is already sitting there and you don’t have to dip into your savings.
But if spending money on budgeting software doesn’t sound like a good place to start for you, there are plenty of free alternatives out there.
Easy to use budgeting software helped us trick ourselves into budgeting as with practice it became a moderately fun and simple process.
4) Treat yourself
Yep. There it is. There has to be a reward for all this saving, sure you can have an awesome trip planned for the future, but it is still might be quite a while away. When we reach a milestone, or feel like we need a break from saving we arrange a reward for ourselves.
From a tasty meal out to a holiday, there are plenty of things we rewarded ourselves with to keep ourselves sane whilst saving. Well, we probably could have rewarded ourselves less and saved more. But we like rewards, and we’ve already mentioned that we aren’t really that great at saving. Sometimes we just reward ourselves for no particular reason. Beer is delicious after all.
We figure just as long as we don’t end up spending our trip savings on rewards, it is all good. (See Tip One)
5) Want less stuff
When we started out on this savings journey, we quite liked to buy stuff. Buying new things gives you that warm fuzzy feeling inside, plus there is just some seriously cool stuff out there. I mean just take a look at this website, seriously, who doesn’t want all of that stuff. But ultimately our purpose for saving was to downsize our lives into the back of a 4WD it made no sense to acquire any new possessions.
That didn’t mean we stopped buying new things as soon as we started saving. In fact, early on we had to make a real effort not to buy new things with the extra money we saved with our cunning budgeting. But over time as the leaving date has drawn closer and we’ve started to sell a lot of stuff we already had and realise that we really didn’t need most of it in the first place. Buying stuff makes you happy. But it turns out not having a lot of stuff makes you happy too. So yep, could’ve saved a bit more money there if we’d been on to that one sooner.
(Quick tip here, if you think something is cool and you’d like to buy it, suggest it to a friend, then when they buy it and lose interest in it borrow it off them one day, it’s free.)
6) Get cheap hobbies
So this one didn’t completely work out for us. It turns out photography isn’t a cheap hobby. But running is. So is cycling, especially if you already have a bike and running shoes. While you’re at it, ride your bike to work, it fills in some time, you get fit and you save on fuel costs. There’s a win. We cut back on a few of our more expensive hobbies, 4 wheel driving, clay target shooting, long weekend road trips, that kind of thing.
7) Don’t feel stink about money you haven’t saved
Face it. Not everyone is a savings ninja. We sure aren’t. But just because you spent more money on your weekend away than you had set aside in your budget, it isn’t the end of your savings plan. Just reassign your money to compensate for your overspending maybe cut back somewhere else—no point dwelling on it.
At least you are having a crack at this savings malarkey.
This is the one we found the hardest. There’s always a bit of temptation to just go off the rails once you’ve had a blowout. After all, you already messed up the budget, so why not go a little crazy before you crunch the numbers again. It happens. We just pick up the pieces and start again.
One thing we learnt, is don’t try to catch up, because you’ll just get further behind, just focus on the future and what you can do with your money in the coming months, not what you did wrong last month.
8) Have an emergency fund
Especially if you have an ageing German Shepherd. They are expensive. Just when you think it is all sweet as *bam* those suckers will cost you two week’s pay in a couple of days. No exaggeration.
At least they are cute.
9) Be cunning about where you spend your money
Turns out you can buy a pair of jeans for $2 at the second-hand clothing shop when you need them.
It can also work out quite well when you find deals on coupon sites. Although they can be addictive and if you buy enough deals it does actually stop being a bargain when you find yourself doing a whole lot of things you weren’t planning on anyway. (For future reference, deleting the emails and going cold turkey is the best way to break a deal site addiction.)
10) Save small extra amounts regularly
Tricking yourself into saving small extra amounts can add up over a long period of time. I started transferring $5 into my savings account every time my co-workers bought a takeaway coffee or ice-cream. I also started collecting $1 coins and swapping any small change I had for more $1 coins, which in turn went into savings.
These things may seem a little crazy or OCD, they probably are, but they have still contributed to reaching our savings goals, so don’t knock it.
So there you go
It was by following these few tips that we tricked ourselves into saving enough for our Pan American road trip.
Once your savings starts to come together, don’t forget to make sure that your money is working for you. If you have high interest debt, that’s probably going to be first on your list to get rid of, or if like us you have a mortgage, maybe it will be better to have an offset mortgage account and save more interest than you would earn in a savings account.
Perhaps you can earn a bit more by investing the money somewhere.
I’m no qualified financial advisor, but maybe don’t invest in one of those investment opportunities that pop up in your spam folder from time to time.
Do you have any savings tips to add?
Leave your suggestions in the comments section below.