Tiny Steps to a Big Savings Pot

Watch your savings increase as you develop a positive attitude

Saving for a rainy day or a far off future rarely comes naturally to us. Our brains are wired to place more emphasis on earning than saving. When it comes to spending, the immediate buzz of the new and shiny often wins out over the dullness of saving.

Simply put, our brains find it difficult to see the real value in saving. This is as true of saving for an unexpected emergency as it is for building a nest egg for retirement. Around 40% of all Americans would struggle to cover a $400 emergency, and nearly half of Britons neglect to put some money aside for their later years on a regular basis.

Fortunately, developing a saving mindset isn’t impossible. What’s more, you don’t have to do it in one massive leap. In fact, never has it been truer that ‘slow and steady wins the race’. Follow these small steps to grow a big savings pot and develop a savings mindset along the way.

1. Track all your spending

If you don’t know where your money is going, it’s hard to determine a regular amount to save. Don’t try to curb your spending when you start tracking it. Simply write down everything you spend each day. It can be difficult to remember every transaction, so I ask for receipts everywhere I go. A couple of times each week I sit down and record each expense in my journal.

There is no judgement, no ulterior motive. Just a record of where my hard-earned cash has gone. With each record, I give thanks for having had the money to spend. This process makes me more aware of where my money goes, and makes saving for birthdays, emergencies and my future a little more relevant.

2. Look after the pennies

It’s likely that you’ve heard about automating your savings — arranging a direct debit to withdraw a set amount on payday each month and put it out of reach before you have a chance to spend it. This is a great way to get started, but it also puts saving out of your mind and does little to change the way you think about saving.

As well as arranging an automatic deposit into your savings account, try setting up a ‘save the change’ feature on your regular account. Each time you spend on groceries, a coffee, or whatever, your bank will round up the purchase to the nearest dollar or pound and transfer it to your savings account. This appears regularly on your statement and tops up the well-intended automatic savings you set up.

It’s more visible while still being painless — a win/win for your savings.

3. Save something small on purpose

If you have your automated saving set up, and you’re saving the change with each transaction, your savings are getting a good boost.

The problem is, you’re still not actively changing the way you feel about saving.

To remedy this, consciously put something aside each week into your savings pot. This could be placing all the coins from your purse or pocket into a jar you keep on a dresser, or regularly rounding down your current account balance into the same auto-savings account. Say your account balance is £56.27 at the end of the week, take the £1.27 or even the £6.27 and squirrel it away into your savings.

The idea is to make small, regular, conscious payments. For me, that means putting five or so pounds away every week. Sometimes it’s only a few pounds and pence, sometimes closer to ten. It’s never enough to make a noticeable dent in my finances, but always enough to make a mental impact.

After a month or so of doing this, it’s become a practice that makes me smile and gives me a small buzz.

4. Set a goal and picture it

My savings goal is a stretch. It’s not impossible, but it will require consistent focus and putting away what I can, when I can, to reach it. It’s not set in stone either. If we have an emergency that needs some additional funds to cover it, my savings pot is where I’ll be heading. Obviously, that would make reaching the goal harder. But, if we don’t set our sights on a destination, it’s almost impossible to get there!

In the same journal that I record my spending, I have a picture of a money jar full of coins. Each coin has a different amount written on it. The coins lead to my ultimate goal for this year. When my savings account balance matches the amount of one of the coins, I color it in. It seems like a small thing, but filling my jar with different colored coins is a satisfying way to picture my savings growing. It keeps me focused on my goal and moving in the right direction.

5. Split the difference

When you get to the end of your saving period, think about splitting your cache. Having lots of different savings pots is harder to manage than one central savings pot. One pot is more motivational because you can picture it and nurture it; focus your energy in one place.

At the end of a set savings period:

• put some money aside to boost your next savings period,
• invest another portion so your money is working for you,
• treat yourself for doing so well.

Don’t forget to treat yourself. Rewarding yourself is an important part of the savings process. It’ll help affirm the value of this repetitive activity. Getting a running start on next year’s savings is also a good trick to keep you on track. It can help motivate you to beat your previous goal.

Final Words

By tracking your spending, you make your money habits more visible. You highlight the things that matter and uncover the previously unseen drains on resources.

Automating your savings is a great place to start; adding small conscious payments will help improve your attitude and savings balance.

Set a goal and visualize it regularly to maintain focus.

When you get to the end of your savings period, split your hoard to keep your money working for you and bolster your enthusiasm for the next round.

Saving money is an ongoing activity which moves you toward your goals. Consciously saving stimulates a behavioral change while adding value and meaning to the activity.

Small steps, regularly made, are what take us to our destinations and change the way we see the world as we make our way there.

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