As far as tough financial words go, ‘savings’ isn’t really one of them. Everyone has a general idea of what ‘savings’ are, and that they should have them. But there are still different ideas about what they represent.
To me, savings are just the dollars that aren’t going towards your immediate needs.
They’re the leftovers. The stuff that can carry over.
The problem was that generally, in my life, there wasn’t a lot left over.
I was barely scrapping by. How was I supposed to be saving for anything?
So I just stuck it at the end of the list. Something that future Chris would have to worry about. (Poor future Chris… I am rarely doing that guy any favours.)
It’s a fair question:
How do you think about savings, if you don’t have any money?
It’s a question that I grapple with, but current Chris (previously known as future Chris) has come through again with a (most likely imperfect) method, that really really helps, and has proven to me that… you don’t need much money to save money.
Step 1: Why do you want to save…?
What. Do. You. Want.
Undefined money sucks. Well… it’s okay… but in my experience it just doesn’t work that well. It’s true for every cent that comes into my grubby mitts and it’s especially true for money that’s going to be sitting around for awhile.
I don’t care what you’re saving for. It can be for an early retirement, or a sweet sweet speed boat (but I would like you to acknowledge that no one is planning your retirement, and that it’s a huge cost, and you should really think about it… but I get it… speed boats are cool).
The thing is, if you don’t have a goal in mind, something that really gets you fired up, that money is just going to get sucked into the unconscious spending vortex that is your daily life.
Lots of people have this generic savings account that they throw extra money into. I used to do that. I’d have a few thousand sitting around, but it was pretty easy for that money to find its way back into my chequing account … where it would be sent to cover whatever credit card indiscretions I’d had the month before.
So, what I do now… is pre-spend my savings.
As soon as I see that I’ve got some extra money that doesn’t need to go towards my general living, I go shopping in the ‘mall’ of projects I’m working on and “spend” it on one of my savings categories (excuse me while I go ice my finger from all the air quoting).
Here are some of things that I’m saving for:
[bscolumns class=”one_half”]A new bike (or to fix my old bike)
A plane ticket home (always… Canada is big, and I like to go home a few times a year)
MY EMERGENCY FUND
LONG DISTANCE RELATIONSHIP
Christmas (that’s right… I save for it all year long)
A new computer (please, please let this one last another 11 years…)
New headphones (always)
Audition trips and fees
Some of the categories are business, some are personal. Some of them I contribute to every month (like my Christmas fund), and some of them only get contributions when I’ve got a bit of extra money.
There are some fun things in there, and some that are absolutely essential to my career.
You can get a good idea of the kinds of “non-essential” things you need to save for just by tracking your spending, or by checking through your last few months of bank statements. OR… if you don’t feel like that, just sit back and dream a bit, and come up with a few things.
Some people break up their savings goals into short term, medium term, long term. That can work. Or you can come up with your own ranking system.
Projects and goals are the things that make it all work; they’re also the reason for doing any of it at all. If you honestly can’t think of anything that you want in your life… that’s awesome. You’re there. You did it. There’s no reason to save… just maintain.
For the rest of us. Dream big (and small… small is fun too).
Step 2. Be the tortoise:
So now you know what you want to save for.
Whoa… whoa… cue the problem we started with… You don’t have enough money to put towards all those things… or even just a few of them.
That’s okay. Before you get all discouraged and toss your computer against the wall in a huff, let’s do some deep breathing and adopt a new savings mantra.
Be the tortoise. Get used to going slow.
This is not a ‘slow and steady wins the race’ thing. No one cares who wins the race except the winner (and the guy who comes in second).
I don’t care if I’m winning… I care that I’m making forward steps toward the goal that I want.
Being a tortoise means accepting the reality of your situation. Tortoises go slow…
If you don’t have a lot of money, you’re not going to be able to put a ton of money away every month. You’re a tortoise. It’s not a bad thing to be.
Slow is good. Slow is way better than dead. #inspirationalquote
Step 3. Form a savings Habit
You are a tortoise. A magical savings tortoise.
And your most powerful weapon is not big bucks. It’s a strong savings habit.
Here it is. No matter how much money you have, the most important thing that you can do is start forming a savings habit… like… right now.
A savings habit just means that every week/month (whatever makes most sense to you) you’re setting aside a few dollars for one or more of your savings projects.
Get used to the idea that extra money that comes in doesn’t get immediately spent (or stuck in generic spending purgatory).
There are tons of ways to set this up.
1. Set up an ‘assisted savings program’ ASP with your bank
Sometimes called a pre-authorized payment plan … blah blah blah. They make it sound more complicated than it is.
Most banks have some kind of program where they’ll take money from your account at a determined time (first Friday of the month, second Tuesday… that kind of thing), and throw it into a savings account.
You do nothing (after it’s all set up).
2. Other Savings Programs through your bank
I know that TD has a program that will transfer anywhere from .50 cents – 5 dollars every time you use your debit card into your savings account.
Sit down with your bank and see if they have any programs in place that will help you save.
But remember, just because you move it to your savings account doesn’t mean you won’t move it back. Make sure you check in with your new savings and remember what they’re going towards. Keep yourself on the road to success.
3. Tortoise Powered
You do it! Self-powered! Because… you’re a tortoise…
Okay. I’ll stop with turtle related references (probably not).
If you’re decently organized, or just like to have all the control, set up your own system.
I don’t use the bank to save small amounts, I do it all through my budget. After my normal costs are settled I go ‘shopping’ through my savings projects. Putting 5 dollars here, and 20 dollars there. Honestly, it’s my favorite part of budgeting.
Even though I could never afford one of my savings projects at any one time, I feel like every month I buy 10 dollars of a computer.
4. Harness your denial: Create a Savings Opportunity
I recently talked about how you can create a savings opportunity by harnessing your ability to be out of touch with reality.
If you end up getting something cheaper than you anticipated, instead of pocketing the extra money pretend that you paid full price and shuffle those extra dollars and cents toward one of your projects.
Read about it more here in this article about AFFORDING A LONG DISTANCE RELATIONSHIP.
5. Digit(ize) it
Or if you really don’t want to do anything (or at least the minimum) there is, of course, an app for that.
A new one on the market is called DIGIT. It connects to your bank account and analyses your spending. After it knows everything about you, it shuffles a few dollars away that it knows you won’t miss.
As an idea it’s pretty cool, but here are a few things to note:
It’s only available in the US of A. So all you Canadians… you’re out of luck (for now).
It does link to your bank account, so there might be some worries there (like with Mint… check HERE for some more info on that.)
If you want to learn more, check out their WEBSITE. It has a fun video with pretty pictures and stuff telling you everything you’d ever want to know.
IT ALL ADDS UP!
Seriously. I know that there are a lot of categories up there, and the numbers might seem like they’re still impossible. But it’s the whole that matters: a journey of a thousand miles begins with a single step, or the you-have-to-eat-an-elephant-one-bite-at-a-time… thing.
You don’t have to wait to start doing this. 99% of you can find some extra cash to put away right now, and I’m telling you… over time it’s going to change the way you feel about your money.
Watching the balances grow, feeling like you’re not just getting by, but actually building up money towards whatever life you’re trying to make for yourself…. It feels incredible.
What’s the point of such a small amount?
Small amounts add up. Tortoises win races (of course I care who wins!… and it’s the tortoises… you’re a tortoise… and also a winner).
It’s amazing how 5 dollars here, and 10 dollars there all of a sudden make things easier.
Left alone at the end of the month it seems like that money can’t buy anything. But tucked safely towards a savings project, over weeks and months you start dealing with hundreds of dollars.
I save 20 dollars a month for Christmas. It’s not a lot every month, but come December I’ve got enough money to buy my family Christmas presents without stressing out.
It works in lots of different ways. Customize it for your life and for what you want!
The only thing that you can’t do is tell yourself that there’s no point in saving because you don’t have a lot of money.
Saving, and more than that… saving deliberately, is super important. It’s another great tool in your tool belt.
So go forth my tool-belted-tortoise..
..and save your shell off.
Want to start getting control of your money? How can I help?
Financial Planner/Opera Singer
Money never came naturally to me. In fact… I was a bit of a disaster. I remember (very clearly) what it feels like to be ‘financially out of control’.
And honestly, I still get stressed about money… that doesn’t stop… the difference is that now I have the tools to deal with that stress.
And those tools are what’s made it possible for me to build a life full of the things I want: art, creativity, travel, family and more.