“Inertia – An object at rest stays at rest and an object in motion stays in motion.” – Mrs. Woods, my 7th grade science teacher. I’m sure you’re thinking, “Why is this guy talking about physics?” Stick with me, it will all make sense in the end.
The most important step to saving money is to simply start. Just start saving, even if it’s just a few dollars a month. Also know there is no “right” way. Here are a few techniques that have helped me and will hopefully help you.
1. If you can’t see it, it’s harder to spend it.
A great way to start saving is to keep those funds in a separate account and out of sight. I have opened a savings account at my credit union and opened an account at a completely different credit union. The trick is to not see the money, so you aren’t tempted to use it.
Funding these “hidden” accounts is just as important as opening them! You could transfer funds online once or twice a month, but it’s too easy to say, “I’ll skip this month.” To avoid this risk, you should try:
a. Automatic transfers: Set a day(s) of the month and dollar amount you are comfortable with to have funds automatically transferred into your savings account. Can’t do that online? Call your credit union and they can probably help set it up for you!
b. Payroll deduction / Direct Deposit. If your employer offers direct deposit, allocate a dollar amount or percentage of your paycheck to go directly to that alternate account. This way, you never see the funds in your checking account.
2. There’s an app for that!
There are some really cool apps out there that can help you save money. One that I personally use and love is the Acorns app. Acorns connects your debit or credit card accounts to an online savings account. As you use your cards, Acorns will “round up” your transactions to the next dollar and transfer the difference to your Acorns savings account. For example, you purchase your non-fat, no-whip soy white mocha for $3.75. Acorns will round your transaction up to $4.00 and transfer that extra $0.25 into your Acorns savings account – automagically! It’s a great way to put money aside without even thinking about it. To top it off, they’ll add funds to your account for referrals! (If anyone at Acorns is reading this, I think I deserve a hefty referral bonus for the shout out J).
If you are a cash user, you can make use of this concept too! A great practice is, at the end of every day, to put aside all the smaller bills and coins you’ve gotten as change. This requires a little more diligence on your part, but it works great for some. Once or twice a month, deposit that cash into your savings account so that you can start accruing some compound interest!
3. Every dollar counts!
There is no such thing as “too small” of an amount. If you’re trying to start saving for the first time, do it gradually. Start with an amount you KNOW you can stick with. If that’s $20 a month – great job! That’s $20 more than you were saving yesterday. Think about it, $20 a month x 12 months comes out to $240. Get to a point where you can do $100 a month and we are talking $1,200 in one year, plus interest! Once you get fairly comfortable with an amount, challenge yourself to increase it. Then repeat and repeat and repeat.
Once you start saving, it will become a habit and inertia will kick in. If you aren’t actively saving money today, my hope is that this article will be what sets you in motion. See, inertia makes sense after all.