Start Small to Build the Habit
Now at the end of this, to me the big part here, is this idea of starting small to build a habit. I do want you to have this idea of starting small because I understand and I've definitely been in the position where the most I could put away was maybe about $5 in a month. And I live in a city where $5 can barely buy you a crappy beer, let alone like a good craft beer at a bar. So it felt like why would I just put away an amount of money that like I can't even go out and enjoy this at Happy Hour. That just feels stupid. The point is building the habit. And I will make the perhaps tired correlation to fitness here, but it's this idea that hey, if you wanna go out and run a 5K tomorrow and you've just been like Netflixing and chilling for the last six months of your life, you are not going to be able to get off the couch and go run a 5K. Same with your money. I think sometimes we come up with excuses and think to ourselves, "Well, when I make more, "I'll just double-down on savings. "It w...
on't be a big deal. "I'll just worry about it then." But what makes you think it's gonna be so easy for you to just automatically start saving just because you're earning more, because the past decade or so of experience you've had has been you not saving. You're not focusing on that. So lifestyle creep can come in and it can be very easy to justify why that's not necessarily an important thing in your life. So that's why I encourage you no matter how small the amount put something aside every time you get paid. And another thing to think about, is inching up little by little, how much you're putting aside. Maybe you just start with half a percent of every paycheck is going into savings. I don't care what the dollar amount of that is, but just half a percent. And then every six months inch it up a little bit. Then you go to one percent, two percent, three percent until you finally get close to your goal. The other advantage of this is you're barely feeling the pinch when it comes to your paycheck. So if you do such a small amount it's not gonna feel like this overwhelming sensation and it won't cause you to maybe even over index how much you're putting into savings in a way that you're gonna be pulling money out. It's a way to kina protect yourself and ease in. And then of course, unexpected money that you come into if that's tax refund, birthday check from grandma, a bonus that you weren't expecting, any money like that, that's also a very easy way of course, to be funding and getting a kinava jumpstart on hitting your savings goals. I like the idea cause you brought up debt already. So, for me when I think about something like a tax refund, I like the idea of putting about 25% into savings, and then 75% of it towards your debts and goals. Because it's a way to make sure that you're putting some money away but that you're still aggressively paying off your debt because you're right, if the financial, especially mental part of getting rid of high-interest, particularly credit card debt is important. But I do still advocate for you having that buffer, cause if and when something goes wrong, you're just gonna be refinancing it on a credit card and continue the cycle. Alright, any other questions as we wrap up today and this conversation about savings? Yes.
We had a question that came in online about do you have any recommendations for sort of celebrating some of these wins, when you are hitting your budget or you are hitting some of these milestones?
Other than a big ol' pat on the back? Ya know that's a great question because I think it can be very easy for us to then go splurge in a way that might disrupt some of these financial goals. That's one reason I like the idea of still having a fun fund no matter what you're financial situation is. And so maybe you're thinking, "Alright, I want to go get a massage." We were talking about that earlier. And maybe to you that is a way that you can celebrate and so perhaps you set a goal of it being $1100 you put in emergency savings so that you have that little extra money when you hit it, you can go and spend it on your splurge item. I think it's also rethinking what you consider a splurge. And doing something that you find enjoyable but maybe doesn't necessarily cost of a lot of money. Depending on where you live, there's a lot of opportunities to go out and do things for free or for fun or just maybe you even just blast it out on social media and get some positive reinforcement there. Because people are definitely happy to applaud you for achieving those kind of milestones. And I know that sounds kind of silly but there are a bunch of communities on Facebook, on Twitter, on Instagram where if you share your debt repayment stories or your journeys and your goals, your gonna get a lot of great, positive reinforcement online. Then you don't have to spend a dime.
Say the word “budget” and most people instantly feel a sense of dread—as if the walls are closing in on them. Most of us don’t like the idea of restricting our spending and feeling deprived of the things and experiences that we believe will make our lives better and more fulfilled.
But according to Erin Lowry, budgeting doesn’t have to be painful. Instead, it’s a great tool for helping you feel in control of your money. By setting a budget, you can change your bad spending habits and focus on purchasing the things you value most.
Once you’ve got your cash flow under control, then it’s time to start saving. Erin will give you a whole host of practical advice on how to save so you can avoid sinking deeper in debt, build a critical buffer in case of an emergency or streak of bad luck, and achieve true financial stability.
In this class, you’ll learn how to:
- Figure out how much you spend each month and track every penny.
- Identify the budgeting method that’s right for you.
- Evaluate your spending categories and prioritize them.
- Create an emergency fund and decide how much to put in it.
- Automate your savings to ensure you reach your goals.
- Find ways to slash your spending and increase your income.