Just like spending, saving is a case of mind over money. That’s good news, because it means that with the right conditioning, you can outsmart your brain into saving more. Here’s how.
Singapore is a dreadfully expensive place to live in. After all, we’ve topped the charts for the second year running as the world’s most expensive city. Basic groceries and clothes cost 11% and 50% more respectively in Singapore as compared to New York City (shocking, we know). And let’s not even get started on the costs of public housing and private transportation.
So all things considered, it’s not surprising that many of us feel like our salaries are barely enough to cover our basic expenses, let alone for us to afford to save.
What we should remember, however, is that it is still possible to save – and a substantial amount too – even if you’re earning only a meagre pay. Just check out the story of how our writer, Budget Babe, managed to save $20,000 a year on just $2,500 a month.
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
How did she do it? By sheer willpower and discipline.
To help you replicate her success and morph from spender to saver, we’ve rounded up these six tips to trick your brain into saving more.
1. Create a separate account for savings
This is hands down the best “trick” we have for saving money. For many of us, our salary is credited directly into our bank account, which is also the same checking account we spend from. Granted, it’s a convenient banking setup, but it also means that every time pay day swings around, we suddenly feel “richer” and more tempted to indulge in frivolous buys.
What we suggest is to set up an automatic draft to pull a certain sum of money – like $500 – from your main account into a separate savings account every month. Over a year, that $500 will snowball into $6,000 (excluding bank interest), which can come in handy as part of your future retirement fund.
If you have to, open your savings account with another bank so that you’ll resist any urge to dip into your savings. Because you don’t see the money, you won’t even miss it. You’ll be growing a tidy nest egg without thinking. Brilliant, isn’t it?
2. Leave the credit card(s) at home
Studies have shown that we’re more inclined to impulse-spend when we’re tired, hungry or stressed. Or when we’re out shopping with friends (bummer!).
If you know you’re going to be in a situation when you might be tempted to spend, leave your credit and debit cards at home. Those shiny little cards may be convenient for payment, but they conceal exactly how much money you’ve been spending, which you won’t realise until you see your card statement at the end of the month and get a rude shock. By then, it’s too late to reverse the transactions.
By leaving your credit cards at home, you’re telling your brain, “Look, there’s no safety backup option. This is all the money I have.” If you don’t have enough cash in your wallet to pay for something, then the answer is simple: you don’t buy it. And that’s how you end up saving more.
3. Keep a wish list of purchases
Sometimes, just pinning that cute dress on Pinterest or changing your desktop wallpaper to a photo of your dream holiday destination is enough of an adrenaline rush to tide you over that initial “fall in love” phase. Think of it like window shopping – you get the same thrill of shopping without actually forking out cash from your pocket. In the same way, putting an item on your wish list lets you admire it as many times as you want, but at the same time know you’re being fiscally responsible by not splurging on any unnecessary indulgences.
Doing so also taps on the power of delayed spending. If you forget about the item after a while, it’s a sign that you didn’t need it in the first place. Less spending = more saving. Win-win for yourself and your wallet.
4. Unsubscribe from advertising collaterals
You don’t have to be in a shopping mall facing tantalising sales signs and beaming sales assistants to fall prey to the lure of spending. You’re equally susceptible when you’re subscribed on the mailing lists for retail stores and online websites, because let’s admit it, it’s hard to resist the siren call of advertising messages like “Get free samples today” or “Up to 80% off your next purchase!”
In fact, we would argue that those colourful EDMs are even more dangerous than in-store marketing, because they can create a “need” for an item you may not even have known existed in the first place. Also, as visual reminders, they’re more subconsciously intrusive than you think, since you get bombarded every single time you open your email inbox. Don’t forget we all check our email inboxes more often than we hit the mall (unless you’re a hard-core shopaholic, of course).
Our advice is, the next time you’re out shopping, try not to hand out your email address or mobile number unless you have to. Your bank account will thank you for it. Plus, it’s a great way to prevent your mailbox from getting over-cluttered.
5. Make saving a fun game
Don’t see saving as a boring adults-only responsibility; it can also be a fun activity if you put your mind to it. For instance, you could save your loose change in a cutesy piggy bank, the same way you used to do as a kid, and transfer the savings to a bank account at the end of each month. Or you could set up a challenge with your friends or family members to see who can save the most in three months.
Better yet, combine the two, like what entrepreneur Ian Isaiah Ding did with his #100DaysOfGold challenge. The rules are simple: start with saving $1 on day one, then increase your savings slowly by $1 per day. By the end of 100 days, you would have saved a respectable $5,050. Behold, the power of compound saving!
6. Visualise yourself as a wealthy person
Last but not least, keep yourself motivated on your journey of saving diligently by visualising yourself as a successful individual. It may sound silly, but athletes and top performers actually use this technique to affirm their goals. Just consider these three examples:
- Boxing legend Muhammad Ali was always stressing the importance of seeing himself victorious long before the actual fight.
- As a struggling young actor, Jim Carrey used to picture himself being the greatest actor in the world.
- Michael Jordan always took the last shot in his mind before he ever took one in real life.
Many successful people, regardless of profession, know the importance of picturing themselves succeeding in their minds before they actually do in reality. After all, if you don’t believe in yourself, who will?
So, try visualising yourself as a wealthy person. How would it feel like? Where would you live? What would you do? The more vivid you get, the better it will work for you. Then work your way up to affirmations by telling yourself in the mirror each day – “I promise to save $x amount today and $Y amount by the end of the year”.
From there, just stick to your convictions and watch your savings grow. Have fun!
Psst…Do you have any secret tips for saving more? Share with us in the comments box below!