Do you ever feel like no matter how hard you try, you just can’t break the cycle of living paycheck-to-paycheck or manage to save money? You certainly aren’t alone and I’ve been there myself.
I didn’t even think much of it because everyone else around me was living the same way. But over time, it weighed on me that I wasn’t making progress. And as a single mom, financial security was top priority.
So I went about changing my money mindset. There were a lot of habits that needed to change and this process required a shift in the way I viewed my own spending. Over time, saving money became second nature and unavoidable.
Here is the process I went through which allowed me to view my finances differently and finally start saving to invest and build wealth.
Contents and Quick Links
Take time before making a purchase
Before you make any purchase, especially that impulse buy that you suddenly feel you can’t live without, ask yourself 3 important questions.
- How many hours did you have to work to earn this purchase?
- How will you feel about this purchase one day from now?
- Will you be glad you made this purchase one year from now?
Once you’ve gone through these three questions, if the purchase is expensive enough to make a dent in your budget, take 24 hours to think it over. If you still want it after one day, then you’re less likely to suffer from buyers remorse.
Be aware of prices
If you buy something often, become familiar with how much it is. Learn what is typical and search out sales or comparison shop for the best deal.
I used to grocery shop without paying attention to the price I was paying for my most common items. However, after downloading my store’s savings app on my phone, I started making note of how much these common items were marked down when on sale.
Once I started saving 15-30% off my grocery bill, simply by tailoring my meal planning around what was on sale, I became more familiar with average costs. With just a little extra effort, I can easily make the decision to buy my shampoo at the drug store like I normally do, or grab it at the grocery store because it’s marked down for less than I usually pay.
Related reading: 11 Tips to Save Money on Groceries.
Try a no-spend challenge
I used to shop at Target every single week. It was my go-to place to get out of the house and enjoy a little “me” time.
Once I became more aware of my spending, I stopped visiting Target all together. But I did increase my Amazon shopping.
My next step in saving more money and simply becoming more aware of my spending habits was to take a no-spend challenge. I gave up Amazon shopping for a full month. It greatly helped me to break the habit of perusing my Amazon app when I’m bored and ordering things that I don’t actually need.
When I really started evaluating my expenses, and shifting the way I viewed my personal spending, I started finding creative ways to make substitutions.
For example, I used to visit my hair stylist religiously every 3-4 weeks. This was a non-negotiable personal care expense in my budget. But it accounted for a significant component of my spending. I researched alternative solutions and found a DIY solution for a fraction of the cost. And no-one noticed any difference.
For more about how I started saving over $300 extra every month, visit The True Cost of Your Morning Latte.
Prioritize your spending
When you create a budget and have a budget and guideline for how much money you have and how those dollars need to be directed, you will start to prioritize your spending.
Just as you need to ask yourself the three important questions before making any new purchase, be sure to consider what is really important. Is there something that takes priority?
Be aware of your overall financial picture
If you feel like you finances are in complete disarray, here are some ways to clean them up and maintain a clear vision of how to manage your money.
- Download an app such as YNAB or Mint
- Track your expenses (How To: Track Your Personal Finances)
- Calculate your net worth (How To: Calculate Your Net Worth)
- Establish a budget (The Beginner’s Guide to Creating a Budget You Can Stick To)
- Revisit it throughout the month
As you step through this process you will be able to track changes over time as you develop better spending habits and start saving more money.
Then, think ahead to where you want to be and set financial goals for your future. This will give you a big picture view and ability follow your progress and feel forward momentum.
This is when you develop control over your financial future.
Save to invest rather than work to spend money
You’ve probably heard the saying “Pay yourself first.”
This didn’t really mean very much to me until I read the book The Richest Man in Babylon. The idea is that a portion of every dollar you earn is yours to keep. If you spend that money by carrying debt and living paycheck-to-paycheck, you are not paying yourself first. You are not saving for a secure financial future. And you will regret it later when you discover that you can’t retire when you need to.
Related reading: Pay Yourself First – The #1 Wealth Building Secret
Define what makes you happy – it’s not all about the money
One exercise that I have found very valuable is writing out a list of the top 10 things that bring joy in my life.
You will likely find that your list is centers around family, experiences and community rather than monetary things. Be sure to focus on what really brings you joy rather than getting caught up in a consumerist culture.