It can be tough for someone to build a habit. Saving money can be just as hard. Putting effort into building the habit to save money could be the key to finding financial freedom.
It doesn’t matter how small you start.
A penny saved is a penny earned. I’ve heard this phrase as a young child but never felt a penny would amount to much. It’s a single cent, the lowest possible US denomination. What is so significant about that?
It isn’t like people are making their riches off of saving a few pennies here and there. How are you to make a living from saving them in the first place? Saving a penny doesn’t automatically mean you earn a penny. That’s not how money works.
I believe the true meaning behind the phrase isn’t about how much but more about what could become.
Saving, even just a fractional amount like a penny or a dollar, is more about building a habit. The discipline required to save money puts you in control of your financial destiny. By starting the habit of saving money – a micro habit anyone can do – your financial journey becomes clearer.
Being a saver myself, I’ve constructed a clear 5-Step Plan To Build the Habit Of Saving Money. You may be surprised how mentally beneficial saving even just $1 can be in your quest for financial independence.
Table Of Contents
- Begin With “Why”
- Start Micro
- Increase Your Habit Incrementally
- Make It Easy For You
- Be Patient
- Celebrate The Tiny Victories
- Conclusion
Before starting out on building a habit, you must do this first.
Begin With “Why”
There are many reasons circulated around saving money.
Maybe saving money provides security for you and your family. Perhaps you’re saving to take a nice family vacation. It could be saving money is a frugal thing people do.
Each one of those reasons to save are great but that feeling isn’t mutual among every person. Some people have a very secure job – with little to no risk of being laid off – so they don’t value savings much.
Vacations aren’t for everybody. While it is recommended to take a break once in a while, a typical vacation could range from taking the family to the beach for a small picnic to a full blown Disneyland family trip. Either option will demand a different proportion of savings.
Whatever the reason for saving is, it needs to be personal to you.
This concept applies to building any habit, by the way, not just saving money.
Once your mind changes from “I want this” to “I need this”, then you will feel “I am this.”
When I first dabbled with my savings, it just felt like something I was “supposed” to do. Everything around me told me savings needed to be a large part of my personal finance.
I followed blindly. Sometimes I increased my savings, while other times I had a “better” need for the money so I lowered my savings rate.
It wasn’t until I realized the impact savings had on me, personally, did I see how much I needed it. At that point, saving money came first before spending any of it.
Fast forward to today, I know that I am a saver. I don’t just dabble with my savings anymore, I make it a high priority to save before anything else.
“Rome was not built in one day”
– John Heywood
Start Micro
My goal of accumulating enough savings to outlast any rainy day could not be done in a few months. It just wasn’t possible and I realized that very early on while I built my savings up.
So I needed to figure out a way to save the simplest way possible. Even if I’m saving just one dollar every paycheck, that’s alright because it would eventually amass to something far greater than, well, not saving at all.
Where did I begin with saving? It began with starting small. I’m talking really, really small like saving $1 every time I was paid. That’s all I could afford to cough up for savings at the time.
Did saving that $1 make much difference in my life? Not at all. Was I able to save my desired amount in a short period of time? Nope.
But what it did for me far outweighed anything I thought. It revealed to me that starting small is the key to my audacious savings goal. Even if it was just a dollar.
I saved $1 for a few paychecks. Granted, it was tiny but my savings began to increase slowly. That feeling of accomplishment poured over me so I did the next best thing I could think of.
I increased the amount I saved.
Increase Your Habit Incrementally
Like anything you try for the first time – and really enjoy – you want to do it more and more.
But building a habit takes time to really stick. That’s why I struggled with saving in the beginning because I started too big too early.
The next time around, I started small. Mentally I knew I could handle the small savings of $1 but the habit of saving was what I was chasing.
I didn’t want to just save. I wanted this to become a part of my financial DNA.
So I upgraded my savings from $1 to $5 for a few paychecks. Once that became comfortable, I upped it again to $10. This continued to happen until I reached an amount that wouldn’t affect other areas of my finances.
Doing so gave me the confidence I needed to regain control of my finances. It proved that I could sustain the lower amount. So if times were rough, I could always lower my savings amount to the last increment.
Thinking back to when I first began saving, I could feel the momentum slowly building up. I just remember thinking this habit was actually starting to pay off.
Increasing my savings – incrementally – motivated me to stick to the habit for the long term.
Making saving automatic made this habit even easier to continue.
Make It Easy For You
Probably one of the most important facets for building a habit is to prevent resistance or avoid difficulty, especially at the start.
Steer away from the path with the most resistance. Attempting to create a habit – in parallel with a high level of difficulty to maintain it – only sets you up for failure.
Think of ways the habit of saving could be easiest for you to continue.
Set up an automatic withdrawal from your checking account to a savings account immediately when you are paid.
If using cash is your preferred method of paying, remove $1 from your wallet and place it into a jar at the end of every week.
Whatever approach you choose, make it as basic and as simple to follow. Build consistency with building your habit by keeping it easy to carry on.
Remember that not all habits happen overnight. In fact, it could take a long time.
Be Patient
How many days does it take for a habit to form? The range of consecutive days is vast. I’ve heard numbers like 21 days, or 60 days, and even 254 days for a habit to stick.
I’m not sure what the true number is but I do know one thing. The forming of a habit is not one day. It’s not even a single digit of days.
To build a habit worth forming it will take time. What takes up the majority of that time – is the discipline to stick with the habit.
But knowing your “why”, starting with a micro behavior change, increasing your habit in increments, and finding ways to make it easy for you will strengthen your patience.
You can make unbelievable progress if you maintain your patience.
Stick to your newly formed habit of saving money, and reap the benefits for your future.
“The day you plant the seed is not the day you eat the fruit”
– Fabienne Fredrickson
Bonus Tip: Celebrate The Tiny Victories
Do not forget to celebrate the small wins. I repeat, do not forget to celebrate sticking to a new habit.
If you’re not used to saving, then building a habit to save will be tough. But it will be easier with small rewards along the way.
Until the habit is fully formed – where you’ve made it second nature – try to have a list of rewards you want.
For example, maybe you’re saving to invest in stocks, reward yourself with purchasing a share of your favorite company. Perhaps you wanted to take the family on a nice vacation, give them a weekend getaway paid from the savings you saved with your new habit.
There are so many ways to reward yourself just remember to keep it within financial reason.
Conclusion
Habits – even just a small one – can empower anyone. As time goes on and the habit becomes easier, you slowly build certainty within your personal finance. This is what many people are searching for especially with saving money.
It comes down to keeping the reason for saving at the forefront of your mind. Even starting with just $1 of saving can be beneficial. This amount is great to start with because it can be increased incrementally. Just keep the level of difficulty low and be patient.
New habits worth sticking to will take effort. The habit of saving money is vital to reaching financial independence.
Do you know your reason for saving money? Have you formed a habit for saving money? What will you do differently to build a new habit today?