I used to see saving money as a huge struggle. What was the point of keeping myself from spending my money if there was something I really wanted now? Anything from a new laptop to a really good looking donut could tempt me to dip into my “emergency” savings fund, and my approach to money was super not sustainable.
Then I started my first “big kids” job this past September. I knew at the time that I wanted to get an MBA at some point, and that going back to school would be super expensive, so I needed to get into the mindset of saving money, and fast. Luckily, I came across one strategy that has saved me a whole boatload of money in just these few months.
It’s super, duper simple to implement, but it’s hard to stick to – and that’s why I’m here. To show you exactly the steps I took to start saving money for my MBA, and to make sure you can make this strategy simple, realistic and sustainable for yourself
1. Set up a new savings bank account that you don’t have a credit card linked to.
It is super important for this strategy that you don’t have an easy way to withdraw money from this account. When your savings account is linked to a credit card, or is with a bank that has a bunch of ATMs, it gets very tempting to dip into the funds you’re supposed to be saving. By setting up an account without those features, it’s a lot easier to save. Do some research, find a savings bank that you like, and create a totally new account there.
Also, setting up a separate account can help your attitude and the way you think about your money! If you’re trying to save all your money in one bank account, keeping your savings amount separate in your mind is way more difficult. And I’m all about making things easy for you! If you set up a new account and think of it as your savings account – the account where all your money for the future goes – you’re less likely to spend it in the present. Something as simple as that can reduce your temptations so much.
2. Decide on a percentage of your money that you’re going to save.
Now’s the time to look at your finances and decide how much you can afford to save. Do you eat out 7 days a week? Maybe you can try eating out one day less and saving the money you don’t spend on dining out. Are you obsessed with shopping the latest trends? Maybe you can promise yourself that you’ll save a little more and spend a little less when it comes to clothing. Find places where you feel confident on cutting down, and use that to decide the percentage you think you can afford to save.
This percentage doesn’t have to be super high! It’s recommended that you should save 10-20% of your paycheck, but you can save less than that. Even if you’re only saving 1%, or 0.5% of your money, that’s still going to help you in the future. As always, I’m a huge advocate for taking small steps to reach your goals. Even saving the tiniest amount of money will put you in a “saving money” mindset, which will make it more likely that you’ll save more in the future.
3. Whenever you get paid, take whatever saving percentage you decided on and put that amount in your new savings account.
Don’t even think about it – before you do anything else (other than maybe pay the bills), take the percentage of money you want to save out of your paycheck and put it in your savings account. You always want to save first and spend later, because you can always come to our savings funds if you really need more money during the month. You can never retroactively save money that you ended up spending. So when you get your paycheck, make sure you save money first thing.
To make it easier on yourself, look into different ways you can encourage yourself to save. For example, you can set up reminders on your phone so that you get a little alert to save your money every payday.
At my company, we can set up our paycheck to automatically be split between two bank accounts. This is super, super helpful for me, because I never even see the money I’m saving in my main bank account! It goes straight to my savings account without any effort on my part. It also helps the way I think about my finances – since the money never reaches my main bank account, I never think of it as money I could be spending. So I would definitely recommend seeing if the place you work has a similar feature.
4. Track and make adjustments every time you get paid.
The most important part of achieving your goals is tracking your progress. So every time you get paid, go over how you’ve done since the last time you got paid. Was it easy to save that much? Then increase the amount you’re saving. Did your budget stretch a little too thin? Then bring that percentage down. It’s okay if you have to save less than you thought you could afford! It’s way more important that you don’t let yourself fall into a rut.
With my first paycheck, I saved 10% of my paycheck. As the weeks have gone on, I’ve kept track of my expenses and found more places to cut back. Now, I’m automatically saving 40% of my paycheck, and still living a great life that I really enjoy! The best part of it all is that it takes such little effort on my part to save – and I get to login to my savings account every couple weeks and see how the number there has grown
I really hope this strategy helps you achieve your goals when it comes to saving money! If you have any questions, feel free to leave me a comment. How much do you want to save? What awesome things could you achieve if you saved a little more every month?