You know you need to save money when:
- You’re living paycheck to paycheck.
- You don’t have an emergency savings fund.
- You can’t pay off your credit card balance.
- You have no idea how much you spend.
- You have not started saving for retirement.
Even when you do know you have to start saving, you can be paralyzed by the overwhelm of starting or thinking about the next steps.
What is the best thing you can do to start saving a lot of money now and in the long-term?
Change your mindset.
Your mindset is a powerful influence that will either hold you back or catapult you forward. Some believe that your mindset is more powerful than your skill set.
How do you change your mindset?
It seems simple, but changing your mindset can be a long process. It’s often a lifestyle change and requires practice.
Create your goals
The first thing you should do is figure out your priorities.
What’s your #1 goal? Buying a house? Saving for retirement? Paying off your student loans?
Whatever your goal is, all of your actions should prioritize it.
Question your expenses
You should then start questioning all of your current discretionary expenses. Things like your regular cable bill, car payments, mobile bill, or dine out expenses.
These are not set in stone and absolutely necessary. You can negotiate your mobile bill. You can make a conscious effort to not eat out as much and start meal planning.
For all of your expenses, take the time to ask yourself:
- Did you need it yesterday? What are you getting out of this item? Is this item an actual necessity or a short-term desire that will pass tomorrow?
- Why do you want to buy this item? Is it because it’s trending or associated with an ideal image? Sometimes we buy things because it represents something we want to become. While there’s nothing wrong with buying things because it makes you feel good, it’s good to be aware of your true motivation for buying and explore if there is another way to feel joyful.
- Do you have an alternative to this item that fits this need? How else can you solve this problem? Can you borrow the item, get it for free or get it used?
- Are you getting the best deal by purchasing it today? Can you wait until Black Friday or Boxing Day?
Then apply the same line of questioning to any future purchasing decisions.
Let me give you an example.
Think you need that new iPhone? Ask yourself why.
Why do you need that new cell phone? What is the motivation behind buying this cell phone? Why can’t you just use your current mobile phone? Are you getting the best deal by buying this phone now?
Final Thoughts on Saving Money
I know this is a long series of questions, but the faster you start doing it, the sooner you’ll start getting used to it.
You have to change your mindset one step at a time. There’s no expectation that you’ll be able to do this overnight. Take your time and do it thoughtfully and intentionally.
Slowly this line of questioning will become a habit and eventually a lifestyle. Before you know it, you’ll have that #1 thing that’s the real priority. You’ll be well on your way to achieving the next big goal!
Just don’t forget that as you save money, make sure that savings grows. Your savings should not be put in a shoe box collecting dust. Put it in a savings account or invest it so that you reach your end goal that much quicker!