The 7 Habits of Super-Savers
- Adam Herod
- Oct 9, 2018
- 5 min read
Seven habits you can adopt today in order to put yourself in a better position for tomorrow! #thewealthmap
1. Automation, Automation, Automation
When it comes to saving money, it is uber important to automate transactions. If it is a chore, you will be less likely to do what is needed.
So make saving as easy as a monthly transaction into your savings!
The super-savers will go as far as taking money out on a bi-weekly, or even weekly, basis. And the super-super-savers will create a second savings account without an ATM card, so the money is even more protected from YOU!
Let's face it - if we were left to do what we please we'd spend it all! So add some easiness into your life in the form of automated transactions, and add a layer of protection for those founds by putting them into a separate savings account.
2. Happy Hours & Meal Deals
I rarely have time for a happy hour, anymore; however, if I did I'd be hitting half-priced drinks and appetizers all afternoon!
If you can't make it to happy hour, join in on this type of frugal eating by hitting up deal nights or lunches. I don't like eating at the same location every week, so it can sometimes be a little extra work to find a deal worth traveling for, but it's always worth the time spent searching.
Eating out can be expensive, but it seems that even in economic downturns you can find restaurants in busy areas thriving. This says a lot about the convenience and joy we get from dining out.
Have fun with it and try to cut your typical bill in half! Even $40 a month turns into $480 a year.
3. Penny Pinching Gas and More
Should you really drive three more miles to save 0.5 cents per gallon on gas?
I don't think so!
But those that do probably go the extra mile with other expenses, as well. Spending and saving are forces of habit, and it's amazing what flipping your mind from "Ah, what the hell - I'll spend the extra money," to "No, I can find a better deal," will do for your life.
...it's amazing what flipping your mind from "Ah, what the hell - I'll spend the extra money," to "No, I can find a better deal," will do for your life.
Go the extra mile on one thing, and I'll bet you'll start going the extra mile on others. Convenience is expensive, just check the gas prices in more affluent areas versus those in less.
4. Skipping the Upgrade
Super-savers don't care about the latest and greatest. Function is all that matters.
Thinking about getting a brand new phone? See how much longer you can go by cleaning up your current phone and checking for updates.
Thinking about getting a new car? Are your current maintenance expenses more or less than what you spend monthly for a vehicle?
What could you do with the extra $100-$400 each month, if you weren't spending that money on a vehicle? Some could start a Roth IRA or fill their emergency fund a heck of a lot faster if they decided to miss out on the latest and greatest.
What looks worse?
Scenario A: Looking great in a luxury vehicle, while over-extending yourself and spending $400 or more per month on a fancy vehicle that will lose value (depreciate) every time you drive it.
Scenario B: Looking so-so in a basic vehicle, while putting that $400 or more per month into an investment vehicle that will increase in value (appreciate) over a long period time.
Scenario B will always look worse on the surface. And, at first, it might suck to not have the newest vehicle or phone - knowing you can afford it. But before long you will reach a tipping point where you begin to separate from the consumer rat race and enjoy the idea that your vehicle or phone isn't sapping your monthly funds.
If Warren Buffett and Mark Zuckerberg aren't driving brand new vehicles, considering their net worth, how could you justify over-spending on a brand new vehicle?
Maybe they know something the rest of us don't, but it's fairly easy to imagine they sleep better knowing their money is being put to work instead of depreciating on a losing asset.
5. Better Credit Use
There is something to be said for having good credit. You can't buy a house without it, and it sure makes a whole number of other scenarios more difficult.
Super-savers limit their credit card use and do not carry a balance.
Some find it best to use one card, only, in order to keep track of spending. Others will carry two cards to maximize rewards and lower their credit utilization ratio.
It is important to do what works best for you. Someone recently recommended that I open up a specific travel rewards card to earn bonus points, and although this can be used as a tool for travel, it did not jive with my overall credit-use plan.
6. Turning Your Nose Up to Financing
There are far too many offers to finance large purchases we can't afford. It makes sense for businesses to offer financing options, because it gets us to rationalize monthly payments.
Do not leverage yourself against future money. This is a losing game.
And it is a terribly easy cycle to engage in without a clear route for escape.
The effective savers are patient until they can purchase an item with cash. The super-savers wait until they can purchase the item two or three times over. Then, they will pay themselves back so that they never borrow money from someone else.
Some of us might not be able to imagine a scenario where we can buy a car or make a large purchase without financing it, but that may just mean it's the wrong purchase for our financial situation.
Even at $90.4 billion, Buffett will go as far as purchasing refurbished vehicles that were once labeled as totaled - finding a loophole for vehicles that experienced exterior hail damage, but no major structural damage.
Are you going as far as you can to put your money to work?
7. Saving to Invest, Not Saving to Save
There's no doubt it feels good to have money sitting in a savings account, and at some level it is important to have liquid funds accessible for any emergency.
But once you have six to nine months of savings in a high yield savings account, your money should be put to work.
Even in a high yield savings account an initial investment of $1000 with $200 per month will only turn into $27,500 in 10 years.
Take that same initial investment with $200 per month and it could turn into $36,000 or more when it earns 7% in that same 10-year span.
That's almost $10,000 more in 10 years just by putting your money in the right account. Not sure where you should begin? Start by looking into a Roth IRA or brokerage account that allows you to buy ETFs tracking wide swaths of the market.
We often forget that the price of goods increases over time. Inflation will slowly undermine the value of your money.
I call this the glacial melting effect; on the surface the glacier looks normal, but underneath a warm, vibrant ocean is peeling away layer after layer.
Your money may look good on the surface, but tomorrow it will not hold the same amount of value as it did the day before.
These seven habits don't cost a thing!
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You can message Adam at wealthmapblog@gmail.com.
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