More than half of Americans have less than $1,000 in their savings account. But we can do better than that.
Earlier this week, I wrote very basic advice on how to actually save money, with tips from some personal finance experts. (I’ve added advice from two more experts, so if you read it the day it was published, do check back.) Unsurprisingly, our readers had a lot to say on the topic, as well. Here are some of your best tips from the comments—feel free to keep adding your thoughts and ideas.
Admit That Saving Is Hard
Developing any habit takes time, effort, and the right attitude, as guppysb notes:
My brain sucks. I keep thinking to myself “Yeah, go keep buying all this stuff that you don’t need, because you’ll eventually have a better paying job in the future.
Well, I’ve been saying that to myself for 4 years. I could saved a good amount in those four years if I lived in the sense of reality.
Says SukaSam:
Adulting is difficult and all the power to the people who have the habits and willpower to save. Just remember that it is never too late to start saving and people to pretend to have “everything” usually have more debt than you have a wealthy family.
Don’t ever try to Keep Up with the Jones!
And SkipErnst adds:
Saving is hard until you build the habit, but it is also immensely rewarding.
There’s no safety net quite like having “fuck you” money in the bank.
Avoid Lifestyle Inflation
Score that promotion? Congrats! But think twice about moving into a larger apartment or upgrading your car. As whatmatters says:
I have been chronically terrible with saving money for my working adult life until the last couple of years as my career progressed, my monthly spending was inflating in direct correalation to my salary increases and eventually I just thought to myself this is so stupid. My advice (what worked for me) was making a plan to implement a budget after a couple of months of tracking where my money was going. Having data allowed me to really drill in to where I was bleeding money (buying lunch at work, frivolous online purchases etc.) and helped me formulate a plan of attack that has allowed me to put away money consistently by allocating for what I need to spend money on, and what petty cash I can choose to spend.
My prime motivator is not wanting to work until I drop dead if I can help it
Pointing at you, mirror says don’t buy into the marketing hype:
My contribution: you absolutely must live at one or two lifestyle levels
below
what you could live at, and then become comfortable living at that lifestyle without deviation.
Of course, every advertisement in the world will be working to tell you to violate this principle.
iLikeTech says:
The hardest part for me was realizing the environment we are in is designed to make you want new shiny things, and hate what you have. Take a moment to reflect on everything you own. Make it a mental game of trying to make everything you’ve already bought earn their cost. It’ll give you satisfaction and you’ll feel less like you wasted so much money. Additionally you’ll focus less on new things and end up saving money.
And Know You’ll Have to Make Some Sacrifices
Most of us do not have enough money for all of the things we feasibly would like. Saving money means you’ll have to make sacrifices so hopefully you’ll be better off in the longterm. This is where people say “skip the latte,” which I don’t find particularly helpful—but you will have to skip some things or settle for less expensive versions. HoshinoKaze advises:
If you think you want something, wait a week and see if you want it still. Look at all your bills and find out what you can get reduced. You can negotiate just about everything. I got laid off a few years back, and I called everywhere and told them I had to cancel because I got laid off. My internet bill went from $79 to $32, I got my car insurance down by about $10 a month.
On that note, WhatsThatSmell says pay yourself before you pay for an upgrade.
Pay yourself first.
Meaning, invest in yourself and your future before you spend $ on anything else. Use $ as a tool to build wealth, not just spend on bullshit.
But Treat Yourself Occasionally
Splurging every now and then shouldn’t make you feel guilty. Says Cereaza:
Budget for indulgences. It’s tempting to splurge a little bit now and then, but it can quickly get out of hand if you’re not planning or tracking it. Have a “Fun Money” budget and use it appropriately.
Make More Money
There’s an important asterisk to this tip: of course all of us would like to make more money—but you also need to, you know, save money to actually build wealth. According to an August 2017 report from Career Builder, around 10% of workers earning $100,000 or more said they live paycheck to paycheck, and 59% said they’re in debt. Making more money will not solve all of your problems.
M42 says:
While I agree with saving early and consistently, especially the Roth vehicle, the best advice I ever got was from my Dad. He told me “son, just make a big pile of money and your life will be easier”. Turns out he was right.
As TallGrassShort says, you can do this by investing your hard-earned savings:
It was my aggressive savings in my early 20s that now makes it such that some years I “make more” on my investments than I do at my full time job.
Know That Saving Alone Won’t Make You Rich
The point of my original article was not to advise people on how to get rich (it was basic savings advice), I appreciated this comment from You’re Probably Wrong:
I know quite a few very wealthy self-made people, and quite a few more fairly wealthy ones (myself included in the last group), and one of the few things we all agree on is that saving will never make you wealthy. It’s largely a waste of effort if wealth is your goal (as opposed to comfort just north of the “I can’t live on less than this” line.) The only way to the top is blind luck (people who happened to buy a hundred Bitcoin back when they were selling for $25 each) or radically increasing your income to the point where earnings growth outpaces spending growth in a big way. If your income isn’t increasing by at least 30-50% per year through your 20s and 30s (with an exception for people with very high initial incomes), all the savings in the world isn’t going to do anything to lift you out of the struggling middle class. It’s the harsh reality that financial bloggers don’t ever tell you about (despite all of the successful ones doing just that - Mr. Money Moustache isn’t living well because he only spend $100 on groceries a month. He’s doing well because Visa, or Discover or Amex or whatever, is paying him mid six figures a year to shill for their cards.)
Saving is important for a lot of very good reasons. It will never make you rich, though. And realistically it will never even really move you up an income class.
Would love to read your thoughts on this.