The first step towards creating wealth is also the hardest. Being able to spend less than you earn is a pre-requisite of every other strategy for wealth creation. Despite good intentions, savings plans are easily de-railed by distractions, disasters and lack of discipline. Here are some simple tips for improving your chances of being a successful saver:
Have a realistic, attainable and desirable goal. Nobody ever changes their behaviour without the motivation to do so. Motivation comes from moving towards something pleasurable or away from something painful, so set a goal that moves you in one of these directions. If it’s a big stretch, break it into smaller benchmarks. Don’t try to achieve too much too quickly.
Focus on doing what you can, even if it’s just small step. Small steps can become bigger steps over time as you learn how to manage your money better. A combination of spending a bit less, saving a bit more, and earning a bit more can make a big difference.
Spend mindfully. Impulsiveness is the enemy of a successful saver. Consider and reflect before you make a purchase. Fear of missing out (on a bargain or a unique item) drives impulsive behaviour, but that fear is often unfounded.
Save automatically. Pay yourself first by setting up an automatic payment into a savings account every payday. Ideally, keep your savings account in another bank so it’s out of sight and out of mind. Start with a small amount which you gradually increase.
Be prepared for the unexpected. Life never goes according to plan so you need to save more than just what you need for your goals to cover unexpected expenses. It’s frustrating to see your savings go backwards, but if the expenses are unavoidable it’s better to use savings than go into debt.