I am a big believer that some of the simplest strategies or approaches to saving money are some of the most effective. It is sort of like losing weight; the thing that works the best (and arguably it may be the only thing that works at all!) is burning more calories than you take in.
Back to Basics
Sometimes we want to ignore the basics, maybe because we sense that the basics will actually change our mindsets, and a quick fix or a shortcut is more attractive because it feels faster and easier, and like it won’t require us to address our bad habits. But that’s exactly why basic elements of saving and budgeting make such a big difference in money management.
Basics change our mindsets because they go straight to the heart of whatever isn’t working. If we’re overweight, it’s often because we eat more than we burn. If we’re strapped for cash, the chances are very good that it’s because we spend more than we make. Really paying attention to the basics gets to the heart of the matter.
“Spot Toning” for your Budget
Today’s post focuses on a basic I really believe in: the power of saving just $100 extra a month. By that, I mean finding a way to save an extra $100 a month, no matter what you currently save. This exercise is easy in that $100 isn’t a lot of money for most of us. It’s difficult in that it will probably be a stretch. However, trust me that saving just $100 more per month will challenge how you approach budgeting and spending more than almost any other step you could take. It’s an exercise that will go straight to your “problem areas” (to continue the health metaphor) for a bit of spot toning.
Finding a way to carve out an extra $100 to save each month will force you to start identifying the fat in your budget, and getting rid of it.
See the Results
The first thing this exercise does is give you insight into the weaknesses in your budget or in your spending. Most of us don’t learn to follow a budget once and then never have to relearn some of those lessons again. A change in income, an unexpected expense, or a difficult time emotionally can all momentarily disrupt our planned spending.
Even being busy and not having the time to pay attention can lead to a few months of being outside our budget or ignoring the need to modify our retirement savings (for example). The exercise of saving an extra $100 is a way to get back on track, to identify where you have been lax and push the reset button.
The second benefit of this exercise is that it has cumulative benefits. Of course, you’ll earn the (probably small) extra interest or return on investment on your $100. More importantly in the short term, it is difficult to stop saving once you’ve starting. Seeing the savings add up, cutting the fat in your budget, and identifying frugal lifestyle changes is so satisfying that you will probably keep going. It will probably make you more attentive to all aspects of your fiscal health, which can only be a good thing.
Last, the exercise helps you make mindset changes. Sticking to a plan of saving a little extra (I recommend $100) for about four to six months really does modify how you think about saving and spending. As a “mindfulness exercise” it is incredibly effective.
If you are thinking you have lost a little control of your budget, or you have a savings goal you are working toward, I encourage you to think about trying to save an extra $100 each month, and I think you will see a lot of these same positive results in your budget and your mindset.
Watch for another post soon, sharing some of my favorite ways to find the extra $100 in your budget to save.