How to Make Saving A Habit

I was looking for my laptop a couple weeks ago, and realized I had left it in the car.  When I went to retrieve it, I found that the car was locked. I could not find the keys.  Finally, it occurred to me that the last place I had seen the keys was when I was in the car.  I went back outside with a flashlight and my son, who wanted to help me, and saw the keys sitting on the driver’s seat.  Fortunately, there was a second set at my father-in-law’s next door, and I was able to retrieve the keys and my laptop.

I locked my keys in the car because I broke my habitual sequence of events upon pulling up to the house from work.  My habit is to put the keys in my purse, or to hang them up on the hook when I get home. This particular day, I received an email just as I arrived home, and I pulled my laptop out, to schedule a meeting in the car.  My routine around the keys is always cued: I keep the keys in my hand until I hang them on the hook. To manage my laptop, I had to put the keys somewhere. In this case “somewhere” was my lap, from which they migrated to the seat.  

Habits run much of our lives, and for good reason: we depend on most of our actions occurring without conscious thought.  We need that efficiency around useful actions. If I never drove a car, I would not need the habit of hanging up my keys in the same spot.  I drive my car routinely, and so the habit of keeping my keys in the same place is very useful for me.

Saving is a useful habit.  It is not a “good” habit. Strictly speaking, there are no bad or good habits, just useful habits, a point James Clear calls out in his book, Atomic Habits.  A habit either serves your desired outcome, or it does not.  Habits are based upon a variety of cues and stimuli. You can build useful habits, and discard less useful habits by building up or breaking down cues and routines that jumpstart your discrete actions.  

For me, saving, like many aspects of financial management, is the same as putting my keys on the hook when I get home.  I have saved more and less at different points in my life, but I have always saved. The longer I have maintained some level of saving, the more engrained the habit has become.  Plentiful resources are not the main driver for my saving. I have faced unemployment, unexpected expenses, and setbacks. I save because I have done it for a long enough time that it is a habit.  Moreover, I have been through enough difficulties to see that saving has proven useful, which further encourages me to continue in my savings habit.

Here are a few ways that I made saving a habit, and how it might work for you.

1. Automate

If you have direct deposit for your paycheck, have your employer put a percentage or dollar amount into a separate bank account.  If you earn money periodically, set up a cue to transfer or set-aside some money for each job or gig.

Example:  If you babysit, ask the person who is paying you to write you a check, and as soon as you receive it (cue: check is put into your hand), deposit the check electronically into your account, and then immediately transfer a dollar or percentage of that money (cue:  you are depositing a check) into your saving account.

2. Link to something you like

I enjoy a fresh hot cup of coffee.  I do not enjoy checking my bank accounts.  I often get a cup of coffee before starting a task I would rather avoid.  I have built a mini-habit into my financial management routine that involves getting something I like (coffee) before something I do not like as much (checking bank accounts).  This mini-habit is so established, that if I get a cup of coffee and sit down in front of my computer and type in my bank’s URL, I automatically begin reviewing accounts. My cue to do something I do not enjoy is something that I do enjoy.  

Example: If you want to save money, try linking that action to something you like.  If you like to browse a social media site, try linking saving to scrolling through posts.  You could skip buying lunch out, and place that equivalent money into a savings account through a mobile banking app (cue: skipped lunch, then open your banking app and transfer money into your saving account).  As soon as you put $5 into that savings account, you can start browsing (link: savings account deposit and enjoyable browsing). Your goal is to link something you like with something you do not like. This is an amazingly effective way to form a habit.  

3. Embrace a different identity

Saving, particularly aggressive saving, is uncommon.  You can search for people with your same goals through various online and in person communities, but those who choose to live beyond their means will always outnumber those who are living below their means.  You have to embrace being different, to persist in being different. Who you believe you are drives your habits, and your habits reinforce that identity. Writing and saying aloud your reasons for saving is a great way to help you focus on yourself, and ignore those around you.  The more frequently you say, write down, or review your reasons for saving, the more likely you will build an identity of someone who saves.

Example:  After a difficult financial year, my husband and I had empty bank accounts.  We had saved $40,000 over a few years, and in a few months, it was gone. I had a clear picture of what I wanted: a renovated house with a place for guests and missionaries, and a full bank account with at least $40,000.  I did not write it down, but I must have said this idea aloud over a thousand times to myself and to others.

Looking for an easy way to save is a futile endeavor.  Saving is not easy. Putting off immediate gratification is never without some discomfort, whether for small or large matters.  If you are looking for easy, go get a Staples button. If you are looking for effective, go build a useful habit. Building habits takes time, but they are the most efficient way to get the long-lasting behavior you desire.  Try one of the above methods, and see if it helps you out to building financial habits that serve you.

Notes:

James Clear writes about habits at www.jamesclear.com, where you can also subscribe to his newsletter.  He recently released Atomic Habits, a terrific book on building and breaking small habits.  As I read Atomic Habits, I started to notice that many of the things I had got “right” with money was a result of small repeated steps that resulted in behaviors and an identity that got me where I wanted to go.

Photo by Bruno Kelzer on Unsplash