Creating A Savings Mindset

Flickr credit: stuartpilbrow.

Saving money: either you do it or you don’t, but that doesn’t mean you don’t want to. If you want to save money, you have to prime yourself to create a savings mindset.

Questions to Ask Yourself About Saving
Before you can create a savings mindset, you need to ask yourself a few questions:

1. What’s your reason to save? Without a powerful reason to save, it’s easy to come up with excuses when things get difficult.
2. How much do you want to save? Having a hard goal makes part of the difference between success and failure. If you don’t have a destination, you usually won’t get “there.”
3. How long are you giving yourself? Is this a short term goal, medium term, or long term? How much time are you giving yourself? Do think it’s reasonable? Could this or will this change at all? If so, why?
4. What are you willing to do to save? Will you take an extra job on the weekends to make more to save, or “sacrifice” something and spend less?
5. What are you sacrificing? Is it tangible (gadgets, car, less entertainment, etc.) or intangible (time). Will you miss it at all? Is what you are working towards more important to you emotionally than anything you might give up? Can you put up with the delayed gratification?
6. What would stop you from saving? Only you can answer this. If you’re not sacrificing anything, or if what you’re saving for is important to you, then you’re less likely to get sidetracked. Maybe your income fluctuates month to month and your debts and regular expenses (have to) have priority. Do you have an emergency fund to deal with, well, emergencies?
7. How are you saving? Are you putting cash in a sock, setting up an online savings account, or some other option? Are you using automatic deductions from your salary?
8. Are you investing? Will you be putting some/ all your money into bonds, mutual funds, stocks or some other investment vehicle besides an interest bearing account? Do you know your risk level?
9. If you earn more, will you spend more? That is, if you get a raise or have some sort of windfall (lottery, gift, inheritance), will you spend it or save it, except when something is necessary? This is a common tendency, and knowing that now might help you deal with surprise extra income.
10. How serious are you? If you have more than one source of income in your family, can you learn to live on one and save the other?
11. How do you manage your personal finances? Do you track your expenses and earnings? Do you know how to use a spreadsheet, or one of the many personal finance software applications? (There are powerful desktop and web-based versions. Both types often allow you to connect to your bank accounts for updates, bill paying, and sometimes funds transfer.)
12. Are you comfortable working online? Do you feel safe doing your banking transactions online? Is your Internet connection secure? If you’re using public WiFi or a neighbor’s connection (which is illegal in some places), you’re potentially opening your financial details and account information up to be stolen.

Now that you’ve asked yourself these questions, you of course need to answer them, then followup with a savings plan.

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