Dear @financial_laura,
I’m just not that into you…er, I mean…finance. How do I get excited about budgeting and saving money when it puts me to sleep?
Nearly all personal finance advice stems from the basic fundamental principle which is: ‘save more than you spend’.
But if this mantra and the key to your financial success is so easy, why don’t people follow through?
What I see in today’s culture is that the idea of saving money, and frankly the topic of wealth is, well, boring.
Compare these two conversation starters:
1) “Hey, guess what? Today I spent $1,000 on the new iPhone X!”
or
2) “Hey, guess what? Today I put $1,000 into my RRSP which I’ll be able to spend in 30 years from now!”
The fundamental question is now, how do we get people to think that the second conversation is as interesting as the first? To answer this, I couldn’t help but draw parallels with the Fitbit craze. For some reason the device has suddenly made it cool to talk daily about calorie cutting and step counting. What’s the secret, and how can its success be translated to turning saving money into a cooler habit?
Here are three really practical Fitbit tips for making savings a part of your daily (or maybe weekly) routine:
1) Technology is fun!
It’s true, we all want that newest device which will make our lives just a little easier. Well good news, there are a ton of apps out there to make your budgeting and savings a breeze. A personal favourite is mint.com. In about 10 minutes, you can link all of your accounts and have your spending habits, budget adherence, and finance goals all tracked and updates sent right to your phone automatically.
2) Automate the math
While it’s definitely possible to determine how many calories you burned at the gym, automating the process removes that challenging piece called ‘remembering to do it’. Similarly, automating your savings will take all the excuses out of why you spent this month’s savings while online shopping.
The best way is to set up separate savings accounts (this can be done online) for major buckets and automate the distribution of funds on payday.
For example, if your take-home pay is $2,000 and you want to save 10% or $200/pay then you could set up the following automatic transfers at your Bank (every two weeks, or monthly, depending on how frequently you are paid):
- Transfer $160 to your TFSA or RRSP account;
- Transfer $20 to a high-interest savings account as an emergency fund; and
- Transfer $20 to another high-interest savings account or TFSA as a rainy-day fund (travel, new car, etc).
3) Make yourself accountable
Let’s face it, the only reason people track their daily steps is so that they can compare it with others. I may be a little biased here, but this is a great reason to have a financial consultant. The role of this person is to check in and ensure you’re on the right path thereby removing the worry and stress from your financial decisions. Another great person can be your partner or even a close friend. Treat it like a fantasy pool – have open conversations about how your financial picks are doing.
Do you have any other tips for how you keep your savings on track?
This article was first published on my blog at journeyfinancial.ca