As humans, habits drive us, and savings habits are no exception. Changing habits is one of the trickiest things to do. If you’ve ever tried to give up smoking, sugar, or any other vice, then you know how hard it can be to rewire your brain to make better choices.
Habits are formed through repetition, and it can feel like a long time before it becomes second nature. This often makes it uncomfortable and frustrating to develop new habits. The good news is that we are all able to change our habits – if we’re willing to stick it out, that is.
According to the European Journal of Social Psychology, it takes around 66 days to form a habit. And although that sounds like a long time to get results, it’s a small portion of your life, and the quicker you’re willing to grin and bear it, the longer you’ll reap the benefits.
Tips for Forming Better Savings Habits
When setting up your savings plan, you have to set up good savings habits to help you reach your goals. And it all starts with turning intention into action.
According to psychologists, a habit has three distinct components.
Part 1: The Cue
The first part of creating or changing a habit is isolating the trigger that inspires action. For example, in the case of saving, it could be getting your monthly salary.
This usually triggers us to start spending the money we receive. However, if we set up a habit of saving before spending, it will help pave the way to better habits and financial security.
Get into Routine
Make it part of your monthly routine to, just like you’d pay your bills, put away your savings first.
Expect the Unexpected
There will be many hurdles along your savings journey, from unexpected expenses to spending more during certain times of the year (think Black Friday and Christmas). You need to try and predict and plan for what you can and cannot give up when you face setbacks – just like you shouldn’t give up on your diet just because you had that one cupcake!
Planning is Key to Saving Money
If you fail to plan, you plan to fail. Always keep a close eye on your budget and make savings part of this budget. If you have this planned out before you get your salary, you can rest easy knowing exactly where your money needs to go to stay within budget.
When You Fall, Pick Yourself Up Again
When you face setbacks, ensure that you have a backup plan. For example, if you’ve skipped saving one month, try to make up for it by increasing your saving payments slightly the next month or over a couple of months. Also, consider putting your end-of-year bonus or tax repayment in your savings account instead.
Part 2: The Behaviour
You need to take action and repeat this action.
Get the Full Picture
Consider what the end goal is. Are you saving for a holiday next year or something long term like your child’s education or your retirement? This will help determine the route of action you should take. Also, try to be specific about the amount you need to save to meet your desired savings goal within this timeframe.
Take it Easy
To save money is a marathon, not a sprint. You have to set goals that are within your reach to avoid disappointment. Start with something you know is achievable and steadily increase it once the habit is formed.
Part 3: The Reward
Incentivise yourself and celebrate the milestones along the journey to ensure sustainability in your savings plan, as well as helping you feel more in touch with the ultimate reward.