￼￼The good news is that when it comes to saving, it has far more to do with your psychology than the size of your pay cheque. Your relationship with money is deep-rooted and originates from an early age. Were you the kid cracking open the piggy bank every weekend, or did you stash birthday cash for months?
Now is the time to get to grips with your attitude towards money and to introduce five behaviours that help you to save. It’s time to do something nice for your future self.
1. Save yourself
We often believe we can’t afford to save because we only think about saving what’s left after everything else. We don’t treat savings as an essential spend in the same way we do bills or an allocated entertainment budget. A useful psychological trick is to pay yourself first. Give your savings the same importance as your rent or mortgage. Save first every month and then adjust your spending to see what you have left.
2. Think about money messages
Money messages shape who we are with money and form our financial belief system. Ask yourself what money means to you and what messages most influence the way you behave. Think back to your childhood – did you squander all your pennies on sweets or were you able to save for something you really wanted? These are money messages and if you positively remember certain behaviours you can challenge yourself to make positive changes. If you believe that you can be successful with money then you can start changing your behaviour.
3. Control your emotions
Money, it is said, doesn’t make you happy, but we’ve all been guilty of the occasional bout of retail therapy. A session of online shopping to cheer you up here, treating yourself to a little something special there. We spend to fill emotional voids or to release endorphins, not to mention when under peer pressure or trying to create a positive image. Money is an emotionally charged topic which magnifies a range of feelings from shame to success. When you know you should be saving you can experience a tug of war between the emotional and logical sides of your brain and we are forever trying to navigate the conflict. Managing our emotions is key to managing our finances. Be aware of your triggers. Rehearse what you will do at times you may be tempted to overspend.
4. Delayed gratification
Saving is a way of prioritising your future self. But we’re intrinsically creatures of instant gratification and tend to focus on our present self. A key psychological strategy here is to do something that feels easy. Set up a simple saving habit, starting with small, easily repeatable steps. Like using an automated saving app to “skim” your bank account – sweeping spare change into a savings account. Or saving £1 or £2 coins in a “change jar”. When you get a pay rise, syphon off the extra. Trick yourself into thinking it hasn’t happened. Reframe your savings positively as a gift to your future self.
5. Making a future goal
Research shows that people who set a goal save faster and are likely to save £550 a year more than those who don’t. Money for a holiday. A lovely pink hat. An extension for your home: it doesn’t matter what it is as long as your goal gets you excited. You’re more likely to be successful if there is positive emotion attached. If your goal is to save a deposit, have a picture of a property in your purse or wallet. This will symbolise your goal and remind you of it regularly. Write down your goal and the chances of achieving it actually improve. Take it further and share your goals with friends and family to hold you to account.
Remember that the ability to save isn’t about what you earn, it’s about what you keep.