How to succeed at saving

It’s no surprise that “saving more money” is a perennially popular New Year’s resolution.

It’s equally unsurprising that it’s a resolution many of us don’t keep. Without question, jumps in the cost of living and unexpected expenses are two reasons why saving is hard.

But saving plans also fail because we haven’t done the necessary preparation.

Here are four ways to prepare to save:

  1. Identify what we’re spending our money on now. Consistent expenses like rent or mortgage payments are easy to keep track of, but we often underestimate variable expenses – especially discretionary spending. An eye-opening exercise is to write down what we think we spend in a month and exactly what we spend it on…and then keep track of every actual expenditure for a month. Once we know where we spend, it’s easier to figure out where we can save.
  2. Make our savings plan an actual plan, not a vague dream. “I’m going to get my spending under control” isn’t a plan; “I’m going to cut back on eating out from twice a week to twice a month” is a plan because it is specific and can be tracked.
  3. Pick the right place to save. There’s no one-size-fits-all savings plan. If your gym membership is important to meeting not just your fitness but also your social needs, saving money by exercising at home may not be the right choice for you. But if you get take-out a couple of times a week mainly because you can’t face cooking a meal after a long day, cooking a big batch of chili and freezing it in dinner-size portions may be a perfect place for you to save.
  4. Set modest goals at first. Back when I was sort of into running, I’d start out slowly. And I felt great. So then I increased my distance and speed, and ended up injured, requiring me to drop out of running for weeks at a time. It’s the same with saving. Choose one area to save a modest amount and build your saving skills and confidence – and reduce the risk of feeling deprived – over several months to a year. You can gradually add more spots to save once you’ve had that first success.

Bob Joyce, CPA, CA, CFP®

Bob Joyce
Bob is a CPA and CFP professional. As a CPA, Bob provided tax and accounting services to individuals and corporations before joining a large full-service wealth management firm. With almost 50 years of experience advising clients in the fields of estate, tax, and financial planning, and a genuine desire to understand and help clients, makes Bob distinctively qualified to help you achieve your personal financial goals and objectives.