Tips on becoming a saver?

[Happyinwonerland]

I need help! I use to be so good at saving money, but these days, it seems like I just spend, spend, spend. I have a little bit of debt I would like to pay off, and I would like to start saving for our next home. I need some advice on how to retrain my mind to stop spending.

We have a good income, low $100,000's each year, but I have such trouble saving. I fall into the "we make a lot of money" trap.

We do have some big expenses. DH is in grad school to the tune of $12000 a year, and I am paying on some medical bills. But the rest is just spend, spend, spend.

Disney 2 -3 times per year, weekend trips away, clothes and toys for Dd, we always spend at least $1000 on her birthday parties (around 35 people attend). I also shell out for a personal trainer, and basically just anything our hearts desire. I have real trouble let saying no. I grew up poor, as in we lived in a tent at one point, so I guess that's why I spend so much now.

Anyway, give me your best tips for resisting the I wanna's!

 

[Jeff_G]

Best tip I can give you is get on a written budget each month. Decide before you spend it where you money is going to go and then stick to your budget. You will have to make saving a priority and give up other luxury spending.
I would max out your retirement accounts so you are forced to save before you get the money in your hands so to speak.

Also realize that possessions and things will never truly make you happy.

 

[Happyinwonerland]

We do have retirement savings. I'm not sure I'm able to max out our accounts though, we have a lot of expenses and a lot to save up for. And I don't want to save every penny and never have fun.

I know possessions won't make.me happy. Truthfully, I spend most of our money on experiences. Vacations, concerts, day trips, weekends away. I love to escape!

 

[alymae1010]

The thing I tell people who ask me for help with their spending is to track it for a month. Sometimes seeing how much is going into certain categories is a wake-up call. It also helps to create a realistic budget. For example, my husband and I have one weakness in our spending, and that is eating out. If I had created our first budget with a low amount in that category, we would have been setting ourselves up for failure. Instead, I knew what we typically spent, and I set a realistic budget based on that. Going forward, we try to stay under that, and eventually reduce the budgeted amount for that category monthly. Other things were easy for us to cut immediately, so we did. Use that savings to pay down debt or save for retirement so you aren't tempted to spend it in other categories.

 

[Happyjen27]

The thing that works for me is to set up different bank accounts. Even within the same financial institution, I have 4 accounts. 1 savings to pay for property taxes and it's my slush savings. One savings is just for emergencies. One savings is for Christmas and Vacations. And 1 checking for everything.

So, I have automated deposit from my paycheck to one savings and a checking. And, once a month, an automated transfer from checking into the vacation account. All of this happens without being aware of it, and once it's out of the checking account, I ignore it. So, I say automate, automate, automate!!

 

[Colleen27]

For us, what worked was stepping back to think about how our spending aligns with our values. We tracked every dime for a couple months and realized we were unconsciously/habitually spending in ways that don't reflect how we want to live - buying things that quickly became just more clutter, getting take-out food we don't really enjoy because it was more convenient than planning/prepping meals, etc. The end result was that we dramatically simplified our life and our spending, and as a result not only do we save more but we also get more enjoyment out of the things we do spend on.

Which isn't to say I have it all figured out. I still have a very hard time saying no when it comes to positive or educational experience for the kids, even when time or money make saying no the smarter route, and travel remains my biggest vice. But at least when I spend on those things I don't end up wondering where the money went or feeling like it was wasted days/weeks/months after the purchase.

 

[KristinU]

I agree 100% with the written budget and tracking your expenses.

We were doing really well and applying Dave Ramsey's baby steps to our financial lives back in 2006-2007, lived by the plan pretty intensely for several years, then over the course of time we kind of wandered away from the control and woke up again about 6 months ago. When I sat down and did a real analysis on what and where we had been spending in the past year I was beside myself. Amazon was a huge money sink for us, huge. And most of it was stuff we didn't need. Of course there were other things as well: travel, races (DH and I are both runners), and day to day small junk that we don't need. Then we wonder why our house is filled with cr@p that overwhelms us! Duh.

Getting back on a written plan has been so refreshing and liberating! When you stop the daily spend, spend, spend you realize just how much buying/saving/giving power you have. Dave Ramsey has a new budgeting tool called Every Dollar. I've switched over to it from our spreadsheets and I really like it. There are some nuances that took me a while to get comfortable with, and it isn't as complex as my spreadsheet was, but I think that's the goal with it - to keep it simple and straightforward and easy to use. It might be something for you to check out.

 

[ZephyrHawk]

Make a monthly budget with future projections. I use Excel, nothing fancy. My budget goes through the 2020's, but you can do yours going just a year out or even less. Show all your "must do" monthly expenses on it (e.g., student payments, mortgage, utilities). It's important for this to have a good idea of what you spend on your credits cards in an average month (assuming you have them). Include these average payments in your calculations. If you don't know what you spend in an average month, make a guess for the first three months and then do an average with your actual amounts.

Include a certain monthly payment amount for "savings". Treat savings as a utility - something that must be paid out monthly.

Do not spend more than is available after accounting for all "utilities". If you have debts you're trying to pay down make the minimum payment a "utility" and consider extra payments additional spending.

 

[eliza61]

Along side making a budget, one thing that works well for my family is goals.

I give myself short term and long term goals and I give myself little goals.

so for example, we're going to Disney in August. I want the Pandora Disney charms so one of my goals is to reduce my eating out spending by one meal and save that money.

My biggie, long term goal is buying a beach house in the South somewhere (not sure where yet). So I'm saving for that. then this goal gets broken down further. I want to have 100K saved as a minimum down payment by 2017, so I have a line in my budget with that. and actually as this balance grows I get excited and want it to grow more.

Also I don't do "extreme" budgets, that's like dieting imo, it simply sets me up for failure and guilt. I can't say "I'll never eat out again". that just won't work for me, I need some enjoyment in my life. If you like to travel, trying to "never" travel again to start saving is a recipe for disaster because after a year or so you'll feel guilty and mean. lol

 

[crisi]

I think you should trade in your personal trainer for a therapist. You were apparently homeless for a while growing up and this isn't minor overspending - we outearn you by - well more than double - and I couldn't afford two trips to Disney a year, a $1000 birthday party for my kid, and $12k in grad school expenses. And I have a $300 mortgage and no car loans. I suspect you have things to work through that are bigger than a budget.

I think you are right that you've fallen into the mental trap of "we make a lot of money, I can afford....." And its going to take mental discipline to break that that when combined with your childhood might be really tough to do on your own. The therapist will probably have you write down what you spend, but hold you accountable where just writing it down might not be sufficient. The therapist should help you understand your motivations for spending a thousand dollars on a birthday party. A therapist may also help you think long term - a thousand dollars on a child's birthday party now turns into what when they have a 16th? Things aren't likely to get cheaper and you've perhaps set up a pattern of escalation.

 

[CookieandOatmeal]

I save my money by having several accounts for different things (Disney, Rainy Day, Regular Expenses) and I have automatic withdrawals to "Disney" and "Rainy Day" to ensure that I have a certain amount of $ saved each month. I also have money going towards 3 retirement funds. I also use QuickBooks to track my expenses every month to see how much I am spending especially on my credit cards. It is easy to overspend when you swipe every time but I pay off my balance every month and rack up points/rewards. Any type of spreadsheets would work too. Self control is also super important. Every time you pick something up to buy, ask yourself if you really need it. If the answer is no, then put it back down and walk away! Do you need Starbucks/Dunkin every day, the answer is no! Make your own coffee at home or dial down the # of days that you get it a week. This is the type of mindset you need if you want to be successful in saving money.

Budgets are great but if you are like me, it doesn't work. My husband made one for me (he's a financial analyst) and I never even looked at it twice. It's all about self control in my opinion.

 

[tink9702]

I recommend YNAB. It's a budgeting software program that will track everything for you as long as you enter your receipts which is a quick process. Our first step was to just track what we spent money on. When I realized we were spending over $900 on groceries and $150 on eating out it was a shocker! So we figured out ways to cut down the food budget and now spend around $500 on groceries & $75-125 on eating out. YNAB lets you set up any category you want so I have one for travel & a separate one for Disney. It also breaks it down by fixed expenses (mortgage, electricity), constant expenses (gas, food) & longer term expenses (travel, emergency fund) and shows you breakdowns for what you are spending. It also automatically takes the money you didn't spend that month in a certain category and adds it to your next months budget. So if your budget for gas is $200 and you only spent $180 then next month will show $220. I love that feature for things like our Oil heating so we budget year round for it and have a huge # by end of summer that basically disappears by May. @@ I hate oil heat!!! lol

Another thing is to delay any purchases. If it's not a fixed expense wait a week to see if you still want that item. Or ask yourself - "do I really LOVE this item, or do I just like it". If you don't love it, don't buy it! For your daughter - consider doing things with her instead of buying her stuff. Take her to the playground, on a carousel ride or go fly a kite outdoors.

 

[#1hoosierfan]

We make about the same amount as you, and there is no way we would be in only a "little bit" of debt if we spent like that. Do you also have a mortgage and car payment?

We are also all about "experiences" over material things. We go to Disney once a year or every two years. The boys' birthday parties are limited to around $250 each, no personal trainer, we do weekend trips but they are inexpensive. Etc....

I think you know where you need to cut back. It takes the discipline to do it.

 

[greentea]

You say "we spend" -- so it sounds to me like this needs to be a team effort between you and your husband. Can you make some new spending goals together and support each other? Sometimes it helps to have someone else gently reminding you that your daughter probably doesn't need another new outfit or a 3rd vacation in a year. Maybe checking in with each other could help, like "I really feel like buying X thing, remind me why I don't need it."

I relate to feeling overwhelmed by changing money circumstances. We never lived in a tent, but growing up we definitely had utility shut-off notices piling up (luckily ours were never turned off except for the phone, but I had friends who didn't have hot water in the winter), only being able to get a gallon or two of gas until payday, putting off grocery shopping as long as possible, getting sent to the community center for free lunch. We were okay, but I noticed these things growing up and it left an impact. Same with the spouse. When we first got together, we were living off of one low salary and had to work to keep our expenses on track. Our finances are better now through a lot of luck, and so even though we should save more, it's hard to want to go back to tracking every purchase and obsessing over money. It's nice to be able to say we want to go to the movies today, so we will. And given other things going on (of the medical variety) the lack of constantly budgeting and stressing over money is important.

I think it's okay if you're not the kind of person who can switch to tracking all purchases. Saving money doesn't have to be like that. But I think there is a middle ground between "everything we want" and "this reminds me of my childhood when we had no money."

I'm still working on that middle ground. I did set up separate savings accounts like another poster mentioned. I have a vacation fund, a don't-touch-unless-serious-emergency fund, a general emergency fund for vet bills or car repairs, and our checking account which covers bills and everything else. When we paid off student and car loans, it freed up money to go into some of those funds.

Maybe you and your husband need to work together to make these fun experiences less expensive. You can have a great birthday party for your daughter for less money. You can also invite fewer guests (especially as she gets older, it's less common to invite the entire class - she doesn't have 35 close friends). You can go to Disney once a year instead of 2-3. Are you staying at the most expensive resorts? Go in the off-season when the prices are cheaper and there are sales, or try a cheaper hotel. Take the difference in cost and think about where you could use it (savings, paying off a loan faster).

Are there cheaper day trips you can do with your daughter? I'm not sure where you go, but the zoo or a farm instead of a local theme park, for example. Library programs? There are lots of experiences that are just as fun for you and your family without costing so much. And learn to say no sometimes or think of alternative options. Or if you normally take, say, 1 weekend trip every two months, push it back to every three or every four and fill in your need to get away with some more local experiences.

I know it's hard, but it's not good for your daughter to get everything she could ever want. That sets her up to have the same habits and the same problems dealing with them. IMO you'll have better luck if you start slowly changing your behavior and making goals to change a little at a time (and get your husband on board) than if you try to cut everything at once. If you track your expenses, you can work together to change or reduce some of them now that you know where it's all going. And a therapist might not be a bad idea, since you're having trouble changing your behavior and you seem to want to -- it gives you someone else to be accountable to, someone you see regularly and who is on your side.

 

[EvieBug]

Agreeing with a lot of suggestions above - tracking all spending for a month is very eye opening. You must be diligent for that month to truly capture everything you spend on, but it's totally worth while. I have on and off kept a budget (an excel spreadsheet that works for me - but You Need A Budget is a good tool as well) for ages... like a previous poster I kind of have been asleep at the wheel for a bit and it's time to tighten up again! This also helps find black holes where money is going - just a while ago I investigated a $10 a month charge from our checking account that DH nor I could explain...turns out he had accidentally signed up for Kindle Unlimited on Amazon. And he never used it!! Good thing I got it figured out just two charges in!

My father taught me very early on that it's also important to not let your lifestyle expand with your income. So when my DH or I get a pay increase, we try to appropriately budget that additional income. So if my paycheck goes up by $100 (making up numbers here) I will stick $30 of that on debt to pay it off faster, $50 into savings, and maybe $20 goes to us doing more fun stuff or whatever. But basically I try to keep from letting the expansion of income automatically = expansion of spending.

I would reconsider the birthday parties for sure, that's a lot of money. My kids get a family party alternated with a friends party - so if their 5th birthday was a family party, 6th is a friends party. Cuts our spending on these events to every other year, plus we still don't do the scale you seem to.

Good luck!!

 

[eliza61]

Also what type of shopper/spender are you? My dh was a horrible shopper. Although he brought what he needed, he would simply walk in the store pick up something without regards to price and purchase.

Me? I'm the queen of the bargain. I can take a dollar and squeeze it until George Washington would threaten to walk off the bill. lol, your parties for your daughter, are you getting the absolute best prices for the items? are you making list before hand and catching the things you need before the party and storing them?

My dh would spend almost 100 dollars more when he did the grocery shopping.

 

[hollypoast]

I recommend YNAB. It's a budgeting software program that will track everything for you as long as you enter your receipts which is a quick process. Our first step was to just track what we spent money on. When I realized we were spending over $900 on groceries and $150 on eating out it was a shocker! So we figured out ways to cut down the food budget and now spend around $500 on groceries & $75-125 on eating out. YNAB lets you set up any category you want so I have one for travel & a separate one for Disney. It also breaks it down by fixed expenses (mortgage, electricity), constant expenses (gas, food) & longer term expenses (travel, emergency fund) and shows you breakdowns for what you are spending. It also automatically takes the money you didn't spend that month in a certain category and adds it to your next months budget. So if your budget for gas is $200 and you only spent $180 then next month will show $220. I love that feature for things like our Oil heating so we budget year round for it and have a huge # by end of summer that basically disappears by May. @@ I hate oil heat!!! lol

Another thing is to delay any purchases. If it's not a fixed expense wait a week to see if you still want that item. Or ask yourself - "do I really LOVE this item, or do I just like it". If you don't love it, don't buy it! For your daughter - consider doing things with her instead of buying her stuff. Take her to the playground, on a carousel ride or go fly a kite outdoors.

Another vote for YNAB. It has seriously changed my life.

 

[Eastern]

Lots of experiences can be low cost. You don't have to rent a car and sleep in a hotel to have fun. Start looking for free experiences, until you have your savings and expenses caught up.

 

[morgan98]

I will second what everyone says about tracking what you spend and trying to set a budget. I have always been a saver and make sure we pay ourselves first. My entire paycheck does not even go into an account that is easily accessible by either of us.

I agree that I think part of your struggle is that you basically came from homelessness into financial comfort which is a fabulous achievement. However, it sounds like you don't say no too much to any type of expenditure. I mean a personal trainer and $1000 birthday parties and 2-3 trips a year? And you want to save for a larger home too? Seems like your income would need to be double what it is to support that, at least if you were saving adequately as well.

We make very good money (like the level Crisi above is talking about) and we do not have cable, we do not have cell phones bills(paid for by work), we do not have a landline, we mow our own lawn and clean our own house (although I am close to hiring a cleaning lady once again). These things alone save hundreds of dollars a month. Maybe you can start with looking at some of these items in your own budget?

 

[usnuzuloose]

We don't have disposable income. So I don't have a problem saying no to things. Right now there are no vacations or anything else. Even needed things we can't get. We have to put away money for our taxes every 3 months. Don't get me wrong I love thinking about vacations and things but I have to be real about finances and do what is right. So for you I would say instead of spend , spend, spend, think of it as I could take this money and apply it to any bills that I could pay off. And take your money and put so much aside for your vacations.