I have a problem with a lot of the common money-saving tips out there.
Things like clipping coupons, cutting cable and finding a cheaper cell phone plan certainly have their place.
But they all share a dirty little secret.
They don’t actually save you money.
What does it mean to “save”?
In our consumer-driven society, “saving money” has become confused with “spending less”. We see ads that encourage us to “save” 15% or more on car insurance. Our friends tell us how much money they “saved” buying their jeans on sale. Even I get excited about how much I “saved” by negotiating with my internet provider.
Look, spending less is a good thing. It’s usually the quickest way to creating some extra room in your budget, and it even has the double-benefit of making your long-term goals easier to achieve. I’m all for finding easy ways to spend less money.
But when society convinces you that “spending less” is the same as “saving money”, it’s robbing you of your future.
See, you have important goals. You want to save for retirement, or buy a house, or travel, or stay at home with the kids, or put money away for college, or know that you can handle the next big, unexpected expense without blowing your budget or resorting to your credit card. These are the goals that matter to you most, and reaching them requires you to do more than cut your monthly cable bill.
If you really want to “save”, you have to put your money somewhere where you won’t spend it today so that it will be there when you want to spend it on one of those goals tomorrow.
That is what it really means to “save money”.
The only tip that’s guaranteed to save you money
Maybe you’ve tried all the tips and tricks out there for saving money, but you’re still struggling to actually build up your savings. If that’s you, I have the solution. I’ve got the only money-saving tip in the entire world that’s guaranteed to work. Are you ready for it? Here it is:
Automate your savings.
That’s it. All you have to do is set up a single transaction that moves money from your checking account into a savings account on the same day every single month. Preferably at the beginning of the month, right after you get your paycheck and before you do all your monthly spending. That way you know that the money will definitely be there and therefore you will definitely be able to save.
It’s that simple, but it’s also that powerful. Here’s why:
- It actually saves money. This isn’t about spending less. This is about moving money from a location where it will be spent (your checking account) to a location where it won’t be spent until later (a savings account). THAT is the very definition of saving.
- It’s automatic. It doesn’t depend on you remembering to do something. It doesn’t depend on there being money left over at the end of the month. It happens automatically, every single month, no matter what else is going on in your world.
- It’s stress-free. No more agonizing over every single spending decision. No more worrying whether buying the slightly more expensive coffee will rob your kids of their college education. Once those automatic transactions are set up, it would actually take effort to stop saving money. So you can stop worrying about it and start living your life.
- You can set it up for any savings goal. You can do it with a 401(k) or IRA to save for retirement. You can do it with a 529 to save for college. You can do it with a savings account to build an emergency fund, save for a house or save ahead for travel. Any savings goal you have can be automated.
If you’re not sure exactly how to set up an automated savings transaction, this post has all the details: How to Automate Your Savings.
No more stress. Just results.
If you’re struggling to save money, this is the single best thing you can do. No more worrying about whether you’re allowed to buy a latte or grab a beer with your friends. No more guilt at the end of the month because you don’t have anything left over to save. No more worrying about whether you’re ever going to be able to reach your long-term goals.
All you have to do is set up that automated savings and watch it work its magic. It’s stress-free and it’s guaranteed to work.
So here’s my challenge to you: choose one goal and set up an automatic savings transaction for it. It doesn’t have to be a ton of money. Even $5 or $10 is a good start. But set it up, and then let me know what you did by either leaving a comment on this post, or emailing me at firstname.lastname@example.org.
I can’t want to hear all about it!