By: Hannah Myburgh
Not everyone is naturally inclined to save or skilled with numbers, but like many habits, saving can be cultivated over time with effort, discipline, and commitment. Building the habit of saving to grow wealth begins with adopting a healthy financial mindset. In this article, we explore practical strategies to develop a strong savings mentality.
Remind yourself why saving is important to you: Saving for the sake of saving is not likely to keep you motivated. Be intentional and specific about what you intend to save for. If necessary, develop a vision board on which you can place visual reminders of exactly what it is you are working towards.
Set SMART money goals: Ensure your financial goals are Specific, Measurable, Attainable, Realistic, and Timely (SMART). Unrealistic or distant goals can lead to frustration. Implement a system to track your savings progress, enabling you to monitor growth and stay motivated as you work towards achieving your financial objectives.
Determine what you want now versus what you want most: Goal setting is not just about distinguishing between ‘wants’ and ‘needs,’ but between what you want now versus what you want most. In a world full of options, staying focused on what truly matters can be challenging. Ultimately, saving is about making mindful choices and prioritising long-term goals over short-term desires.
Understand your money personality: If you’re looking to change bad money habits, take time to analyse your money personality and the factors that drive your spending. Reflect on how your upbringing shaped your relationship with money. Are you driven by a fear of scarcity or do you spend impulsively for emotional relief? Do your online spending habits differ from those when using cash? Is the money in your wallet already "spent" in your mind? Do sales trigger FOMO, or do you tend to hoard? Assess whether you maintain a healthy balance between enjoying life now and saving for the future.
Work towards a profit margin: If you were a company, how healthy would your balance sheet be? Would you generate a profit each month, and what would your profit margin look like? Viewing your personal finances as a business can provide valuable perspective. Strive for a consistent profit each month and, more importantly, invest those profits to grow your wealth over time.
Don’t increase your spending when your salary increases: It’s not about how much you earn, but how you manage what’s left over. As your salary increases, avoid letting your spending increase proportionally. Be intentional about maintaining steady living expenses so that salary increases directly boost your profit margin and ability to invest. Guard against lifestyle creep, which can erode your investable income.
Automate your savings: Automating your savings means paying yourself first. With technology and savings apps, it’s easier than ever to set aside money for the future. By automating, you ensure that you live on what's left, making savings a priority. Find a system that works for you, and ensure your savings are consistently managed.
Reject consumerism: Deliberately reject consumerism by resisting the constant urge to need, want, and buy more. With powerful marketing and the ease of online shopping, the temptation is strong. Take intentional steps to distance yourself from the noise and focus on what truly adds value to your life.
Question all your purchases: The speed and convenience of modern shopping often prevent us from taking the time to conduct proper market research, compare options, and explore alternatives. Online marketers are skilled at creating a sense of urgency, convincing us that we’re getting an exclusive deal or limited-time offer, which leads to impulsive buying. Make a conscious effort to slow down your purchasing decisions—do your research, read reviews, and if needed, give yourself a 'cooling-off' period before finalizing a purchase. Practice the art of delayed gratification to make more mindful, informed choices.
Create an annual calendar: A budget thrives on predictability, and one of the best ways to avoid surprises is by overlaying your monthly budget with an annual calendar. Highlight one-off, ad hoc expenses such as back-to-school costs, varsity deposits, festive spending, birthdays, and holidays. This broad view of the year helps ensure that unexpected expenses don’t catch you off guard, allowing you to plan more effectively and stay on track financially.
* Myburgh CFP® is a financial planner at Crue Invest (Pty) Ltd.
PERSONAL FINANCE