A friend and I were discussing the merits of the stringent save compared to the balanced save last night. It’s tempting to be cut and dried about saving – we’ll live in abject misery for one year so as to set ourselves up for a great next ten years.
But is it the most sensible way to save?
Saving as Calorie Counting
Saving money is like losing weight. You want it done, and as fast as humanly possible. So you could crash diet, look skinny for three weeks and then fall back into old habits. Or you could realise that the most important rule is that you need to eat less energy than you expend every day. If you don’t use all your energy, you’ll gain weight. If you use more energy than you take in, you’ll lose it.
Saving is technically as simple as that – you need to spend less money than you earn. The difference between the two is the money you can save. The practice of this principle is tricky, but appreciating its simplicity is the first step.
Keeping A Trim Budget
I’m not a big fan of severe measures. I’m sure they work for some people, but I’m a save-then-splurge type and need to recognize the stringent budgets have the opposite effect on my bank balance as intended. I’ve fallen victim to over-optimistic budgets (“Yes, of course I’ll only spend $50 this week on dinners out, movie tickets, petrol and cappuccinos…”) and I think a bit of brutal honesty and gradual change do the trick much better.
Work out the reality of your numbers, and how much you can save as a start point. Don’t make it a misery-inducing figure. Leave enough money for your entertainment costs, as well as necessities. Then make it a direct debit from your account. If you can’t handle the pain of saving, take yourself out of the equation and automate it. Once you’ve assimilated that amount of saving into your week, see if you can increase it.
No Spending Day
Instead of having a starvation spending diet, why not aim for one day every fortnight or month where you don’t spend any money? Obviously, living costs money- electricity costs, text messages, bus fares. But if you can have one day of every month where you don’t spend any money on coffee or lunch or takeaway or shoes, and instead go to work and have a quiet night in, you’ll be amazed how much money you can save. And it doesn’t have to be awful, approach it as a detox- a time for a bit of quiet, away from the capitalist crush.
Like all things, spending has an element of the addictive about it. You get into a spending rhythm, and purchasing starts to become routine. Knowing your own personality is key to your savings scheme. If you’re someone who can quite easily spend $30 a week on clothes consistently, but never much more than that, then maybe leave that habit as part of your life.
You could be saving it – sure- but maybe you’ll splurge badly if you cut it out entirely. Conversely, if you’re someone who’s spending rapidly accelerates, think about going cold turkey and buying only necessities.
Stringent or Steady Saving
How you save depends on your priorities. The most important thing is that your saving is a long-term sustainable aspect of your life. There may be periods where you need to save desperately but, for the most part, a steady saving scheme is your best bet.