Recently, we came across a simple money tip from billionaire entrepreneur Mark Cuban on his Maverick blog that we think resonated in today’s financially stressed world. Cuban answers the question “so what should you do to get rich?” with this point above all else: “Save your money. Save as much money as possible. Every penny you can. Instead of coffee, drink water. Instead of going to McDonald’s, eat mac and cheese. Cut up your credit cards. If you use a credit card, you don’t want to be rich. The first step to getting rich requires discipline. If you really want to be rich, you have to find the discipline.
Indeed, many pros agree with him that saving money can make you, if not rich, at least richer (and the good news is this: savings accounts now pay a lot more than a year ago, and you can find the best rates you can get here). But, just as Cuban says, saving money takes discipline. So what does it take to create the discipline to save money early and often?
Ask yourself this question – then do a thorough follow-up on it
“The first step is wanting to make changes,” says Spencer Betts, Certified Financial Planner at Bickling Financial Services. So ask yourself: Do I really want to achieve this goal? If the answer is yes – really, really, yes – then you’re on the right track.
Then look at why you answered yes – what will it mean for your life to have money saved? How will it significantly improve your life? Financial therapist Rick Kahler says he’s seen people go from nothing to saving $5,000 a month after exploring their emotions and beliefs about money. “There are many things a person can do to steel themselves in short-term behavior change, but they often just don’t last. This is a case where a person has to slow down to go fast. The results are that people who spend thousands of dollars and many years trying to get [wealth] by short [cuts]could have reached [that goal] much faster if they slowed down and looked under their psychological hood,” says Kahler.
Create a specific and reasonable goal
Then having a specific goal in mind for making the change can be helpful. “Any time you change the way you spend money, it’s going to feel weird. You’re going to have to change your lifestyle in some way, so it’s good to focus on good reason to make this type of change,” says Betts.
Starting with small changes, rather than big ones, can help you stay on track without feeling like you’ve lost control. It might be something as little as saving an extra $100 on every paycheck. Another tip: “Look at your monthly recurring expenses to see if there are any services you pay for that you no longer need. It’s good to do it periodically, like every six months. Are there any costs that can be avoided in the future like late payments, ATM fees or overdrafts,” says Betts.
Just like Cubans, Betts says making coffee at home instead of taking it out, or cooking more at home instead of eating out can increase your monthly budget. “Even though these expenses may seem small, if you can reduce your expenses by $25 per week, that means an additional savings of $1,300 after 1 year,” says Betts.
See the best savings account rates you can get here.
Examine your past behavior to avoid future mistakes
Mistakes can derail us – and even if you will, avoiding as many as possible will help you stay on track. So look at what has derailed your savings in the past. Betts says one of the most popular questions asked of him by customers between the ages of 16 and 60 is how they can develop discipline to save more money. One of the first things he says to these customers? “Try to understand why behind past financial mistakes, why did you feel the need to make the purchase, sign up for the service, or surpass yourself financially? We need to understand our motivation to spend money so that we can bring changes in the future,” says Betts.
Reward yourself along the way
“To develop the habit of saving, each time a person saves, they need to reward one of the senses,” says Julia Kramer, financial behavior and leadership consultant at Signature Financial Planning.
Use these simple tricks
According to Kramer, research has shown that simple techniques such as naming a savings account, viewing a savings goal, or having a picture of a savings goal and looking at it for several minutes a day increase savings rates. about 5% to 7%. “I joke with my customers that it’s free and it’s calorie-free, so why not give it a try,” says Kramer.
Automate your savings
To do this, set up an automatic transfer from a current account to a savings account. See the best savings account rates you can get here.
Be smart with deals
If you’re making money through a bonus or tax refund, it’s important to pay attention to your psyche. “When customers receive a bargain, we think about having fun today and having fun in the future. This way, customers have the opportunity to enjoy the present while planning for the future.
Certified Financial Planner Marguerita Cheng says you can reduce the temptation to overspend by not storing your credit card information online. “You can also minimize the number of apps you have, which makes it harder to splurge,” says Cheng.
Know that mistakes will happen – and have a plan to get you back on track
Ultimately, Kramer says to be kind to yourself and understand that most of us are hardwired to disregard the future. “We’re still wired for prehistoric life, so worrying about today at the expense of today is an evolutionary adaptation. Our brains haven’t fully adapted to the current world,” says Kramer.
As for things you should be sure to avoid, Cuban wrote this in a 2015 blog: “There are no shortcuts. None. With all this madness in the stock and financial markets, there will be scams popping up left and right. The less money you have, the more likely someone will come at you with a scheme. Programs will guarantee returns, use multi-level marketing, or be something crazy that is now “backed by the US government”. Please ignore them. Always remember this. If a deal is a good deal, they won’t share it with you.
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