Clear the runway
Humans are lazy. It’s something that’s ingrained in us. It’s an evolutionary thing – we will always seek the route of least resistance wherever possible. I guess it’s why we can often fail to take off with our money goals. It’s not that we don’t want to save, it’s just it all feels like a bit too much effort.
We start with great intentions, “I’ll save £500 per month and build up my savings for a rainy day”. Then life happens over the next month, you buy yourself some new shoes, that night out with your mates, then there’s your mothers birthday and oh there’s a new restaurant round the corner we must try, and on it goes. We get to the end of the month and look on in horror at the £0 balance, or dare I say it, the negative balance that’s continuing to build up from months of overspending. Quite frankly, there’s too much debris on the runway for us to ever achieve savings take off.
The best things in life are the simple and effective solutions. There’s a quick win you can implement to get started and build up your savings consistently over time. Your discretionary spending probably just dropped off a cliff so what better time than now to reset your money habits and achieve savings take off.
Pay yourself first
This is the most simple and powerful method to growing your wealth, yet it’s remarkable that more don’t realise how easy it is. You work hard, so why wouldn’t you pay yourself first. We eagerly set up direct debits for council taxes, mortgages, credit card payments, gym memberships etc – all set to pay someone else, but we never pay the most important person, you!
Invest in you by setting up an automatic payment that takes a portion of your monthly earnings. Once that’s done, you then know instantly how much you have left for the month ahead
Separate your savings from your spending
It’s the old ‘clear the runway’ trick. If it’s there and readily available it’s much more likely, you’ll spend it on all that ‘debris’ that gets in the way e.g. life. However, when we make a distinction between our monthly expenses and monthly savings, we start to build some structure around our money management. One pot being for now, and the another for your future self/unexpected moments in life.
Set up a separate savings/rainy day pot which will receive your automated savings each month. Watch on as you build and grow it effortlessly over time.
Start and build up over time
‘I can’t afford to save each month’. My all time favourite line. Okay I get it some are less fortunate than others, however you need to change your mindset with this. We start by paying yourself first, then we consider how we spend the remainder each month. Start at £1 per month if you like, I guaranteed you will not miss it, and build it up from there until you reach an amount that works for you. 10-20% of your monthly income saved would be considered the sweet spot.
It really is that easy. So, time to get started on your positive money story.
Savings runway clear for take-off captain! Happy savings.
Keith
We love all money questions at team@spentwell.co.uk