To help you save money, financial planners recommend following some sort of a budget, like one that follows the 50-30-20 rule. But first making and then sticking to a budget requires discipline and consistency.
Deploying a few mind tricks might help, especially ones that create a little friction in what would otherwise be a too-smooth, too-easy, online shopping experience. For that reason, “avoid the one-click option 100% of the time,” suggests Brenna Baucum, a CFP in Oregon.
Here are five ways certified financial planners recommend you help yourself save.
1. Automate your savings
Here’s how it works: The day you get paid, a pre-set amount of money is transferred directly from your checking account into separate savings or retirement savings accounts. Most banks let you do this through their website or app. It happens without your having to think about it.
By automating monthly withdrawals, you take care of your savings first. The added benefit is that what’s left for spending will be “guilt-free” since “the mile runs before you eat the cake,” says Mike Biggica, a CFP in San Francisco.
2. Think of purchases in hours worked, not dollars spent
To do this, you need to know how much you earn per hour, which can be done with a payment calculator if you’re a salaried employee.
You still might want the sweater, sure. But thinking about it in terms of effort can help you decide whether any purchase is truly worth the cost.
3. Do your spending with cash
As the month goes along, you’ll know exactly how much money you have left, and you can redistribute the total amount as needed, if you’re short on cash in a given category. Any excess cash left over at the end of the month can be added to savings or rolled over into the next month.
4. Do a spending cleanse
5. Wait 24 hours before making large purchases
What defines a “big purchase”? One that requires about 1% of your income, generally. That means that someone making $60,000 would have a 24- or 48-hour waiting period to buy something that costs $600.
This trick works well for online purchases, says Baucum: “You’ll be surprised by how much you remove from your Amazon cart, if you look at it again the next day.”
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