Saving can be easy. With just a little bit of work, figuring out how to pay less – or not at all – for specific goods and services is not that difficult. Just Google “save money,” and you will be inundated with solid suggestions. Incorporating some of those ideas into your life can be a game changer.
I say “can” because I think the more challenging task is using the “found” money to boost your balance sheet. Reflect on those times when you made good decisions, spent frugally or flat-out abstained without seeing tangible positive results. The struggle is real.
The magic happens when you turn your hard work, discipline and restraint into meaningful change. Here’s a four-step approach to take your savings game to the next level.
• Identify the savings. Are you skipping soda and opting for water? Saving gas by carpooling? Canceling cable? Packing your lunch? Identify what you did and how much you saved. Be sure to log your savings, either electronically or on paper.
• Establish a separate holding account/location. My immediate thought is to set up a new savings account and nickname it “financial good.” However, there might be a need for a place to stash some hard currency. So, along with a trusty savings account, figure out how you will sock away the cold hard cash that is the result of your savings labor.
• Regularly transfer funds to a holding account. Whether you are stuffing an envelope with cash, dropping change into a jar or tapping “transfer” on your phone to slide money into your new savings account, this is the key step in the process. Ideally, this step happens in close conjunction with the act that allowed you to free up the money.
• Create a redeployment strategy and routine. How often you gather up your savings and use it to pay down debt, save or invest is up to you. A month is long enough that you should have accumulated a good bit. Putting it to work should offer positive feedback that motivates you to keep going.
This is not about doing something new; instead, it’s about being more purposeful in what you’re already doing. End your catch-and-release program and work both elements of the savings game: saving ... and saving.
J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.