We live in an age of immediate gratification. A world where we can pull a sleek device out of our pockets, click three times, and, as if by magic, whatever we doth desire can be at our doorstep in 48 hours or less. We get it, it’s hard to save. While it may be challenging and require some discipline, it’s not impossible. We spoke with a professional to get us on the straight and savings-savvy narrow.
Miron Lulic, CEO and founder of SuperMoney, is definitely someone we trust to know his dollars and cents. He totally understands human thinking patterns when it comes to money and spending, and can relate in an empathetic way. While he’s a genius of saving himself, he’s not a stingy savings savant—he enjoys nice things just like we all do.
Lulic realizes that one of the biggest obstacles of a successful savings plan is the temptation to dip into your savings or “forgetting” to make new deposits in your savings account. “I advise people to set up a separate account and try to put some friction between that account and your main checking account. By friction, I mean you should make it slightly inconvenient to access your emergency savings or stop the automatic contributions.” We think that’s a super smart place to start.
Lulic details this first step and a few other major tips to streamline your process, so you can make this year your most lucrative yet, for the future, anyway. Future you says thanks.
Set up an account at a new bank
To provide the right amount of friction, set up a savings account with a provider that is not your primary bank. It will make the money that accumulates there somewhat out of sight and also adds some additional friction to the process of getting the money out. You may even qualify for a savings account with a sign-up bonus.
Set up direct deposit or recurring transfers
Once you have an account, it’s time to set up automated transfers for every payroll period. If possible, set up automated transfers as part of your employer’s direct deposit. This will make it harder to turn them off (added friction). Alternatively, you can set up recurring transfers that are timed to your payroll directly in your online banking system. When selecting an amount to save, try to save 15%-20% of your pre-tax income, but any amount is better than nothing—even if it’s $20 per pay period.
Download an automated savings app
Another way to save is to download an automated savings app. These apps connect to your bank account to monitor your transactions. They round up each transaction to the nearest dollar and micro-deposit the difference into your savings. This can be an excellent way to supplement your savings plan.
Monitor and reduce unnecessary expenses
Of course, you can’t save anything if you’re spending more than you’re earning. So, the first place to start is with a budget. There are great tools that pull down all your transactions from your bank accounts, credit cards, and loans to help you see where you’re spending your money. This can help you avoid frivolous spending and improve your saving habits.
Budgeting might be a glaringly obvious tip, but we figured we all could use the reminder. You can be staunch about this—some Virgos out there might absolutely love a new reason to create a spreadsheet and maintain organization there. But if revisiting a document monthly, weekly, or even daily seems laughable, just give yourself a ballpark number to stay within. This can be for anything.
For example, if you work hard but you play just as hard, you might notice all your funds are being funneled into your favorite local restaurants and bars. While it may seem like you could never part with that absolutely perfect $18 martini, it might behoove you to consider limiting it. Give yourself a budget or a cutoff for expensive nights out. If you were to look into how much can easily be spent just there, you’d be amazed. And not in a good way.
The same goes for shopping, of all kinds. It’s important to give yourself a little spending money for whatever comes up, whether it’s your lover’s birthday or an incredible sample sale. But eliminate that idea of scarcity. There will be more clothes. There will be more sales. If you’re at your max budget for fun spendies this month, let your credit card cool off. Spending mindfully and heeding Lulic’s tips will have you rolling in it by the end of 2020 … it might even be a good reason to treat yourself!