The Only Money-Saving Tip That’s Guaranteed to Work

The Only Money-Saving Tip That’s Guaranteed to Work

Photo courtesy of jessicahtam

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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 matt@momanddadmoney.com.

I can’t want to hear all about it!

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0 Comments... Be the first to comment
  • Emily @ evolvingPF October 13, 2014

    Such an important point! I’ve been really conscious over the last year or so on my blog to use “spend less” when that’s what I mean instead of “save” – but it’s difficult since that’s the preferred term by readers. I end up saying both, somehow. The only way to save is to actually save (and then don’t touch your savings until the appointed time).

    • Matt Becker October 13, 2014

      I interchange the meaning too, so I’m just as guilty as anyone else. As long as you’re using those “savings” to actually “save”, it’s all good!

  • Even Steven October 13, 2014

    I would also say the only way to save is to not buy the item, tons of money saved by not buying new clothes, car, cell phone, etc. I certainly use the automated portion to have less money available to spend though, so I agree as well.

    • Matt Becker October 13, 2014

      Well, I think we all have to buy stuff, right? I don’t have any issue with spending money. I just want to see people first putting money away towards their goals. After that, spend away!

  • Mrs. Frugalwoods October 14, 2014

    Great points! I agree that getting a good deal, or buying something for less, doesn’t really equate to savings. I’m all for automating my money–makes it easier and leaves less room for human error!

    • Matt Becker October 14, 2014

      “Easier” and “less room for human error” are huge for sure. When it takes more effort to stop saving money than it does to save, you know you’re on the right track.

  • Jason October 14, 2014

    Really good point here. I think where I struggle with is making the decision to automate my savings (beyond just my retirement moneys) and paying off debt. I want to pay down debt faster, but being a new home owner I want to have a bit more of a cushion. Every time I reach a level I want to be I come up with an excuse to keep saving more.

    My new plan is to save to a certain level, automate it, and then “chunk” the debt. In other words, pay off the debt in bigger chunks. That way I begin to get into the habit of automating my savings beyond my retirement, I save money, but then can use that to pay off the debt in chunks and bits, which for me is a good thing because it can keep me motivated.

    • Matt Becker October 15, 2014

      Sounds like a plan! The save vs. pay down debt debate is always a tough one. It’s part math, part personal, and there often isn’t a right answer. I can definitely understand wanting a cash cushion (it’s helped me out in a big way before), but I would encourage you to automate some of your debt payments as well. It’s the same logic as automating your savings, and there’s no reason you can’t be doing both at the same time. That might help you get over the resistance of “switching” to debt payment once you’ve reached a new savings goal. Good luck!

  • Kayla @ Red Debted Stepchild October 15, 2014

    You make a good point. “Saving” by just spending less isn’t really saving, especially if you don’t reinvest those “savings” into an actual savings account (or put it toward your debt). If you spend those “savings” on eating out or some other frivilous purchase you haven’t really “saved” anything.

    • Matt Becker October 17, 2014

      Exactly. Spending less on one thing needs to go hand in hand with saving, or at least with purposefully spending more on something important. Otherwise, what’s the point?

  • Sarah October 26, 2014

    That’s a wonderful idea!! We don’t automate our savings, but we do automate money that goes into our mutual funds. Automating guarantees that money will get saved and it guarantees you are paying yourself first! Thanks for the great read!

    • Matt Becker October 27, 2014

      Well it sounds to me like you ARE automating your savings, which is great! Whether it’s into a savings account, an investment account, college fund, retirement fund or anywhere else, putting those contributions on auto-pilot is incredibly powerful. I’m glad you’ve found some success with it!

  • Michelle October 27, 2014

    I would not put any money into my retirement plan unless it was automatically taken out. Now, I don’t even think about it because I never got used to that extra money being on my check.

    • Matt Becker October 28, 2014

      I feel the same way. I don’t even notice that it’s gone, and I certainly wouldn’t want to deal with the hassle of having to remember all the time. Much easier and less painful to just set it on auto-pilot.

  • Chona February 18, 2017

    Thank you for the wonderful tips!

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