By Dr. Daniel B. Prescott, Jr.
Many of you reading this column may have once tried to save money by setting aside a nominal amount of cash each month. Chances are, it didn’t take. You might also feel defeated, thinking that you’re unable to get out of your current cyclical situation of income versus bills. It may always seem that you have just enough to get by but never enough to save.
What I’m here to tell you is this: saving money requires a long-term commitment to behavioral change. It’s no different than a person wanting to begin an exercise program. You’re not going to lose 10 pounds the first week. And you won’t be completing a marathon after taking up jogging for a month. It takes time, discipline and the patience to see things through if you finally want to break the cycle of having no money in savings. It all begins with the creation of a simple monthly budget. Add up what you bring in, and subtract what gets paid each month. Keep it handy.
Before we get into specifics, I want to tell you about a program that our nonprofit runs called A.I.M. The A.I.M. program stands for “Accountable, Inspirational, Motivational.” In conjunction with assistance from the United Way of Metropolitan Dallas and Resource One Credit Union, we establish individual development accounts with matching fund deposits up to $25 each month. While that may not sound like much, the amount saved becomes $600 after 12 months in the program. Applicants must qualify for this assistance program and details for enrolling can be found here.
How to save? Just start!
Do you know where saving begins? With a goal. It will be much easier for you to embark upon a savings plan if you have a specific dollar amount in mind. Maybe it’s only $100 each month, but it’s still a goal. As mentioned before, the runner who completes a marathon once had to complete a mile. It’s the long-term behavior and discipline that will get you to that goal. To save $100 a month, divide that into $25 each week. Make your deposit and forget about it. Soon, you won’t even miss that $25 deposit. If you stick to this plan for a year—that’s 52 weeks—your total savings will be $1,300. And you’ll be asking yourself why you didn’t begin this process sooner.
If, like most people, you have a very tight budget and aren’t sure how you’ll be able to set aside a specific amount of money each week or month, look into cutting back one of your monthly bills. Phone services is a great place to start. Despite what you’re paying, I know from all the ads I see on TV that someone always has a better deal. Call or visit your service provider and let them know you want to lower your bill. They’ll take you seriously and you may not even lose any options in the deal. Take the difference in your new, lowered bill and put that towards savings. It also works the same way with the cable and insurance companies. These folks want your business and are willing to get competitive to keep it.
Need to find other creative ways to get some slack in your income? You can always find ways to save more money each month. Pack your own lunch for work, stop eating out so much and avoid spending money on frivolous pursuits. Make careful shopping lists for groceries and stick to them. Do your best to compare prices. Keep a close eye on your gas and electricity use. Shop smarter with coupons, discounts and sales. You need to adopt a “save first” mentality. Every month you’re reminded to pay the electric company, the gas company, the rent, mortgage or landlord. But when do you pay yourself?
Closing tips to start your savings journey
If you take away one thing from reading this column, make it this: you have the power to change your circumstances. It simply takes effort. It works the same whether we’re talking about saving money or getting in good physical shape. The concept of changing your long-term behavior to achieve what you want is the key. A great place to start is My RA, an initiative for beginning a savings program, run by the U.S. Treasury.
At Transformance, we go out of our way to not just provide sound advice on financial coaching but also encouragement. If you feel like all you need is a little encouragement to get started, come talk to us. We can help. And you can benefit.
Transformance is always available to answer your questions and assist you, either through our website or by calling 1-800-249-2227.
Dr. Daniel B. Prescott, Jr. is the interim CEO of Dallas-based Transformance Inc., a fully integrated financial services capability nonprofit. He can be reached at firstname.lastname@example.org.