A survey found that 44% of Canadian pre-retirees have less than $5,000 in savings! It’s not a good place to be in.
Saving money is a common financial goal, yet for many individuals, it can be a constant struggle to build a substantial savings cushion. If you often find yourself wondering, “Why can’t I save money?”, you’re not alone.
The challenge lies in curbing unnecessary spending habits and adopting a mindful approach to your finances. In this article, we’ll delve into the reasons behind the difficulty in saving money and explore five practical tricks to help you cut down on spending and boost your savings efforts.
1. Identify Your Spending Patterns
Before tackling the issue of saving money, it’s essential to identify your spending patterns. Many people underestimate how much they spend on daily expenses, impulse purchases, and non-essential items.
Tracking your expenses for a month or two can provide valuable insights into where your money is going. Use apps, spreadsheets, or notebooks to record every purchase, no matter how small.
Every time you buy something, write it down right away. This way you won’t miss anything and have a clear picture of your spending habits.
This awareness will help you pinpoint areas where you can make changes. You might be surprised to notice how much you are actually spending on your daily coffee habit. Or how much of your monthly income is going towards buying gifts for friends.
It can truly be enlightening to perform this task for a couple of months.
2. Set Clear Financial Goals
Saving money without a clear goal can feel abstract and uninspiring. Establish specific financial goals that motivate you to cut down on spending.
Whether you’re saving for a vacation, an emergency fund, or a down payment on a home, having a clear target makes it easier to resist unnecessary expenditures. For example, you could put down a goal of buying a house in five years and start saving toward that.
Break your goals into smaller, manageable milestones to track your progress and celebrate your achievements along the way.
3. Create a Realistic Budget
Budgeting is a powerful tool to rein in your spending and allocate your money purposefully. Create a detailed budget that accounts for:
- Fixed expenses (rent, utilities, bills)
- Variable expenses (groceries, entertainment, dining out)
Allocate a portion of your income to savings before considering discretionary spending. Be realistic about your budget-allowing some room for enjoyment prevents a feeling of deprivation. This increases the likelihood of long-term success.
If you deprive yourself too much, you might end up splurging on a big-ticket item when you don’t have the cash for it.
4. Practice the 24-Hour Rule
Impulse purchases can quickly drain your funds. Implement the 24-hour rule for non-essential items. When you’re tempted to buy something on a whim, give yourself a 24-hour cooling-off period.
This delay allows you to assess whether the purchase is truly necessary or a fleeting desire. More often than not, you’ll find that the urge to buy fades, and you can redirect those funds toward your savings goals.
This might seem counterproductive when there’s a sale or a limited-time offer. But you will notice quite often that these sales last longer than you imagine and the limited-time offers aren’t as beneficial as they tell you.
5. Adopt Mindful Spending Habits
Mindful spending involves making conscious choices about how you allocate your resources. Unfortunately, most of us are walking in a state of automation, not thinking twice before buying something. If you become mindful, you can stop and think before swiping your credit card to buy another item that you have many of in your closet.
Consider these practices to curb unnecessary spending:
Needs vs. Wants
Differentiate between needs and wants before making a purchase. Ask yourself if the item is essential for your well-being or if it’s a fleeting desire.
Quality over Quantity
Invest in quality items that offer long-term value rather than going for cheaper alternatives that may need frequent replacements. For example, spending $100 on a pair of good quality running shoes is better than buying a cheap pair from a thrift store that will hurt your feet and last only a month or two.
Cash vs. Card
Paying with cash can make you more aware of your spending. If using a card, track your transactions regularly to avoid overspending. Also, make sure to look through your credit card statements to ensure no random charges have been added by scammers or unscrupulous businesses.
Research and compare prices before making a purchase. Online tools and apps can help you find the best deals and discounts.
Also, look through online reviews to find products that are good quality and last for a long time.
Regularly declutter your living spaces. This practice not only clears physical clutter but also encourages you to reflect on your consumption habits.
Learn From Others
There are many others out there who are interested in cutting down on spending and saving more. You are not alone.
So go out there and join those online forums or groups. Read through their comments and learn tips and tricks to reduce spending.
They might have tips for coupons you could cut or stores that offer discounts on a particular day of the month. There’s so much you can learn from the wisdom of the crowd.
It will also help you feel less alone on this saving journey. You can finally stop living paycheque to paycheque.
Why Can’t I Save Money? You Just Haven’t Learned the Ways Yet
We aren’t born with a manual on how to be financially savvy. It’s unfortunate, but that’s the way it is.
Most people have no idea how to save money and have zero dollars in their savings accounts. They end up asking, “Why can’t I save money”, but have no clear answers.
With these frugal saving money tips above, you are on your way to financial wisdom and independence. Need a little extra help along the way? Instant loans can help.
Apply online and be approved within minutes. Have the money in your account to do with as you wish.