Four Ways to Build Your Money Saving Skills

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There are only three things you can do with money: spend it, save it, or give it away. The choices you make–on everything from impulse buys to planned purchases–can have lasting financial impacts. World-renowned leadership guru Stephen R. Covey said it best: “You have to decide what your highest priorities are and have the courage—pleasantly, smilingly, non-apologetically, to say ‘no’ to other things. And the way you do that is by having a bigger ‘yes’ burning inside.”

To help you get started, Ashworth College has compiled four financial skills you can start developing right now.

#1: Take control of your savings

If you were fortunate enough as a child, your mom or dad may have opened a savings account in your name for the cash your friends and families tucked into your birthday cards. Keep going with that account and watch it continue to grow.

If you don’t have a savings account, it’s time to open one. Many banks offer accounts without monthly or annual fees. If you don’t see one on their menu of services, be sure to ask. It may be an option that’s unadvertised. Set up an auto-draft from your primary checking account and name it “Adventure Fund” or “Cruise Fund” or “House Fund”–something that will remind you what you’re saving for. Auto-draft a set amount into that savings account monthly. Start where you can. No amount is too small! The key is to get in the habit of putting money away before you ever see it in your checking account.

If you put $25 per month away, in one year, you’ll have $300. Challenge yourself. Can you double that amount the following year? It doesn’t take long for small savings to add up to significant value. You’ll feel a great sense of pride when you see how much you’ve saved. 

#2: Get serious about essential versus non-essential spending

Essentials are things like rent, healthcare, car payments, and utilities. Non-essentials are generally the fun stuff like eating out, movies, concerts, memberships, and travel. (Fun fact: Europeans spend the most on eating out and travel while Australians spend the most on recreation in general, according to World Economic Forum.)

Write down all of your expenses for a month and then take a hard look at your essential and non-essential spending habits. Your cell phone may be essential, but how about that Netflix no-ads upgrade fee or those cute, impractical shoes?

Be brutally honest about what you can and can’t live without. Cut down on the giant frozen caramel espresso drinks and see if life goes on. Live without some of the little things and put that cash into your new savings account.

#3: Use cash for weekly expenses

Using cash is counter-intuitive in the digital world. You probably pay all your bills online and use a debit card for expenses. The problem with that is twofold. One, it’s hard to get a grip on your spending habits when you never “see” your money. And two, most people have a hard time delaying gratification, which leads to spending frivolously in the moment.

Figure out a weekly budget for things such as groceries, gas, toiletries, incidentals, eating out, entertainment, etc. Now, once a week take that amount out in cash. When the cash is gone, you stop spending until next week.

Make it your goal to end each week with a little something left in your wallet. Get a jar or box to store what you have left in cash each week. You’ll want to hide that storage container from whoever in your house might tempt you to dip into it prematurely. Then once a month, roll up those coins or straighten out the paper money and put it all in your savings account.

Sticking with the budget is your goal. Using cash helps you leave the savings alone for something important: that trip, the fancy shoes, a gift, a new car, your new home–whatever your heart desires!

#4: Plan for big-ticket purchases

Most of us can get by paycheck-to-paycheck. It’s when we get sideswiped with the big-ticket items–a car repair, an unexpected doctor visit–that we get into trouble financially. The only way around these is to plan for them. It’s great to have an “Adventure Fund” to look forward to spending, but you should also have a “Rainy Day Fund” in case of emergencies. Putting even $5 a month (or better yet, a week) into emergency savings can give you some peace of mind. When a problem turns up, you’ll have some funds set aside for dealing with it. And a problem will turn up. So, don’t dip into the emergency funds for something non-essential.