Budgets Don’t Work, Saving Habits Do

Some financial advisors would have you believe the answer to the housing affordability crisis is to give up barista-made coffee, avocado on toast or any small pleasure that makes it worth getting up in the morning.  One of the troubles with this thinking is that if you are forced to give up or neglect life’s pleasures, saving will feel like a burden. Everyday life will be full of resentful, bad-tempered people who haven’t had a morning coffee and are probably not effectively saving the money anyway.

Creating A Budget: Does It Work?

Rather than making incremental changes to things you don’t want to change, a far better approach to savings is to… well… save. Be like a certain sports brand and Just Do It.

Forget creating a budget – a time consuming and stressful task that could take hours and too much fiddling with a spreadsheet. Instead, go right now to your online banking, create a new savings account and set up an automatic direct transfer of $10 a week. Bang. Fifteen minutes, you’re done. Go and have a coffee to reward yourself, and don’t feel guilty about it. 

Building Saving Habits

Rather than cut things out, start with the fundamentals and make a savings plan part of your habitual expenditure.

Of course, there are ways to build on your savings plan that don’t require you to give up the little things that keep you healthy, efficient and happy. Suggestions include:

  • Choose something to save for – having a concrete goal to aim for can encourage you to save. Research the costs, work out how much a week you need to save to reach your goal and how long that will take you. If you want it sooner, increase the amount you save and set up the automatic payment. You’ll work out how to spend what’s left while you  can track your savings goal.
  • Don’t impulse-buy – if you still want The Thing a week after the first urge to buy it, go back to the shop. This has the plus side of also giving up Buyer Regret.

Assured Home Loans has a list of ways to develop savings habits and finance book Your Money or Your Life is built around the idea of working out how to align your spending habits with your values and work on spending money simply to cheer yourself up because you’re otherwise unhappy.

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