Saving

Let's talk about everyone's favorite subject - saving!

First off, saving is really hard, so give yourself a break if you have trouble saving money.

But why is saving hard? It's usually one of two reasons:

You are living paycheck to paycheck and your number one goal is survival (and rightfully so)
You really weren't properly educated on money (don't worry, we'll teach you)

What does this all mean? Well, specifically for #2, it means you were never really taught how to handle money, so as soon as you have it, you spend it. It could also be from not having or sticking to a budget - good thing we have an entire section dedicated to that.

It's the old adage "this money is burning a hole in my pocket". It's this weird feeling we all get that

seeing extra money in your bank account entices this immense urge to "put it to use", even if that "use" isn't a necessity. We all go through it at some point in our lives: we finally are making our own money and can finally buy the things we could never afford before. There is a freedom to it; an uplifting sense of being able to buy what you want when you want it. But tread carefully friends, because we can fall in a dangerous trap.

SURPRISE! There is a third reason, and it's the worst culprit of them all: Keeping up with the Joneses.

PLEASE, PLEASE, PLEASE - STOP CARING WHAT PEOPLE THINK!!

Do you know who has to pay off that BMW every month? You do.
Not your neighbor, not your coworker, and especially not your best friend.
It is entirely YOUR responsibility.
People care that you bought a new car or a new watch for about 37 seconds and then the moment passes.
Here's a quick tip: Want to feel that same sense of pride of having something new but in a much, much cheaper way? Go rent a car on Turo for the weekend. It'll get the impulse buy out of your system and that payment alone will make you want to save your money.

Now, let's talk strategies:

Change your mindset
- Your relationship with money is 1000% psychologic
- A critical point in learning how to save money is seeing the bigger picture
  - I don't need the latest iPhone because I want to start investing
  - I should buy a cheaper car because that is what I can actually afford
  - Maybe living at home for an extra year (or two) will allow me to afford to buy a house versus rent (it's okay to rent, but it's important to change your mindset)
- Like many of us, maybe doing it for yourself isn't enough motivation - if so, find a reason to do it for someone else. (If I save enough money, maybe I can retire early so I can enjoy my family later in life)
- Again, let's work on changing your mindset: It's not saving, you are paying yourself
  - In Rich Dad, Poor Dad, the author speaks about paying yourself before you pay your bills
  - What does this teach?
    - It teaches you to prioritize your saving
    - If you pay yourself first, you are more likely to figure out a way to pay your expenses
    - This does not mean you should over-save to the point where you cannot pay your bills
    - It is more so saying "Okay, I put $500 in savings and I need $500 for bills, so maybe I don't have to spend $200 on dinners and drinks every weekend."
- Next, pretend you don't have it when it's in your savings
  - Just because it is in your savings, does not mean you should have immediate access to it.
  - Sure, it's your money and totally liquid, but that doesn't mean you should buy something out of your price range because there are extra funds in savings.
  - Savings should be for emergencies and PLANNED major purchases.
  - That's it. Stop negotiating with yourself about it.
Still struggling? Put it into a bank account that you don't have online access to (and auto-deposit every month). This way you still have "access" to the funds, but you won't see it every time you open your banking app.
Write. Everything. Down.
- That means EVEYRYTHING
- Every meal, every snack, every shirt or pair of shoes. Even that Starbucks coffee you buy once in a blue moon.
- Write it down. This does two things:
  - It allows you to keep track of your daily purchases and make decisions off of that.
  - It makes you cognizant of all the little things you buy throughout the day and how those little things add up
  - Surprise third benefit! It eventually becomes really annoying to write down everything you're buying, so it usually influences you to weed out the things you don't need just so you don't have 10 pages of purchases in a single day.
What are some savings vehicles you can use?
- Certificate of Deposit
  - Put an amount you can live without in a CD
  - This will put it "out of sight, out of mind" and it will actually grow over time due to interest
- Money Market Account
  - These accounts are tied to an investment account and is an effective way to transfer money to an account you don't have immediate access to
  - Sure, you can always transfer between your accounts, but hopefully the thought of having to transfer the funds you think you need will cause you to not transfer it at all
  - Having your money in a money market account may also influence you to start investing it, which isn't a bad thing at all (please educate yourself first)
- Traditional Savings Accounts
  - This is always an effective method, but be sure to have discipline to not dig into your savings for things you don't need
  - If you are using a traditional savings account, please understand that the FDIC only insures up to $250,000 per bank. It is a good strategy to diversify your funds in multiple bank accounts so avoid the risk of the bank failing (yes, this happens)
Finally, hire a financial advisor or coach to help motivate you and keep you on track
- Think of this as a personal trainer for your money
- If you paid someone to help you lose weight or build muscle, there is extra incentive to do the work so you feel like your money is going to good use
- The same psychology applies to a financial advisor or coach
- Having to check in with somebody and review your monthly expenditures is a great way to keep you on track
- We are advocates of this and are always here to help!