Hey Mamas! How many of you have thought about money in the past week? It’s been top of mind in the DC area due to the partial government shutdown and so many furloughed employees. But aside from this unique situation, money is a subject that is frequently on our minds – whether we are considering how much to put toward our children’s extracurricular activities, how much to spend on groceries, or how to save money in a way that helps us meet our future dreams. But what happens when we become too obsessive about monitoring our spending and focus only on our saving habits? That’s when we experience burnout, overwhelm, and feelings of deprivation. In this article, we’re going to walk you through how to save money so that you feel like you have more of it and plenty of fun in your life.
Instead of focusing on what we should take away, let’s focus on what we can add to make our lives feel abundant. When we’re focused on how to save money, we shouldn’t put our energy toward adding just any ‘ole thing in order to promote feelings of abundance. Instead, we should add in more of what matters most to us. What are the top three things you want to create more of in your life? What things or pursuits make you feel alive? What do you want most for your children?
Perhaps the things you value most are relationships, good health, and financial security. Or perhaps your top three are your child’s education, experiencing the world through travel, and music lessons. Or maybe you value having a comfortable, spacious home for your family to relax and play in, going to watch sporting events as a family, and having a high quality, safe vehicle. No matter how you respond, these are your unique values. These are the areas where you should allocate your spending, while reducing spending in others areas of your life. Then focus on saving the difference.
Here is an example of how to save money according to values, MK style. MK’s family values quality time together more than anything else at this phase of their lives. MK wants to be home full-time with her children and her husband wants to work for the federal government. In order to make that a reality, they have to cut back in many other areas such as entertainment, housing/remodeling, vehicle expenses, eating out, and travel. By reducing spending in these other areas that are not as high a priority to them, they are able to continue saving for retirement, college 529’s for their three children, and their emergency fund. Aside from quality time, her family also values education and financial security.
And for a taste of how to save money Von style, Von’s family places a high priority on education for their daughter, paying off student loans to free more money for their future, and world travel. One of the ways they make room for their travel priority is through travel hacking. Yvonne never pays full price for a trip. Instead she uses points, the Hotel Tonight app, and Groupon Vacation just to name a few.
Wants are fun! When you are fortunate enough to have all of your needs met, you can focus on how to save money by living according to your values and a few wants. Choosing one to three wants, according to your savings goals and tolerance, is plenty. This quantity allows us freedom to pursue hobbies and passions while still helping us save.
Examples of wants may include: Studio fitness classes, gym memberships, getting our hair colored, eating out or delivery, new fashions, home decor, classes, children’s activities/extracurriculars, gourmet organic groceries, grocery delivery services, most anything purchased on Amazon, hosting parties and events frequently, concerts, that regular coffee shop or smoothie purchase, etc. None of these things are bad. We just have to pick the few things we want most.
Maybe your wants change every few months so that you get to add variety into your life while still meeting your savings goals. Or maybe you can take a closer look at your wants to see if there is a way to still get the same quality but at a reduced or no cost rate.
Let’s take MK for example. Right now she is putting money toward many wants and could focus on how to save money more effectively by finding creative ways to scale back without sacrificing quality.
Want #1: She has a gym membership
Want #2: She loves her once a week studio yoga class
Want #3: Extracurriculars for her three children like violin lessons, Girl Scouts, soccer class, a preschool mommy and me music class and summer day camps
Want #4: She occasionally pays for personal development classes and courses
From a pure objective standpoint this is a lot of wants and a lot of money being spent from her family’s budget. For reference, her past wants used to include take-out/restaurants, shopping for clothes for fun, buying books, and highlighting her hair every three months. Are any of these on your list? Now MK rarely or never spends money on these things since her priorities shifted over time. She still has some wiggle-room to get more efficient with her spending.
Looking at her current wants, where can she reduce costs and still maintain the same quality she craves?
Option #1: She can stop her gym membership and workout at home. In theory this sounds logical but there is the serious risk that she will stop exercising throughout the week, except for her once a week yoga class. Poor health would hurt her budget even more on down the road.
Option #2: She can reduce the frequency of her yoga practice to once a month or every other week. This feels inauthentic since once a week yoga is a form of mental, spiritual and physical therapy for her. She also has a strong connection with her instructor and fellow classmates. But she can set money aside and purchase reduced price gift cards to the studio during gift card sales. She can also ask relatives for yoga gift cards for birthday and Christmas gifts to offset the costs. And when her children are older, she can even work at the studio’s front desk in exchange for free or reduced price classes. There appear to be a few options to help offset costs.
Option #3: She can ask relatives if they are interested in contributing to her children’s extracurriculars for birthday and Christmas gifts. She can also look at summer camps through the community center that are well-run and much lower in cost than private camps. Many faith-based organizations also offer donation only summer camps. There seem to be some cost-saving opportunities here.
Option #4: She can check out personal development books from the library and attend free webinars online instead of paying for these products. This seems like an easy solution and one she is willing to do to elimitante this want.
Now it’s your turn. Let’s focus on how to save moey by making a list of your current wants. Where can you cut back so that you are only spending on no more than three wants at a time? How can you reduce the cost of some of those wants without sacrificing quality? Are there free fitness classes in your area? Von found a free community center fitness facility near her house. Do some research and get creative!
How can I possibly forecast my money, you may be asking? Just like with the weather, forecasting means sitting down and writing down trends for the future; aka your money goals. This is a fun project to also do with your spouse or partner as a date. Sit down and dream about your future as you work out how to save money together. What things do you want to save money for in the next years? How about in the next five years? How about ten years from now? How about thirty years from now? Ideas may include a special vacation, a downpayment on a house, home repairs or remodels, your children’s education, retirement, long-term care, setting aside some for aging parents who have very little to cover their retirement expenses, or perhaps donating to other charitable causes. By thinking about the future, you can start making plans for how to save money now to reach your future money goals.
When will you spend the money you set aside? Will you buy a house before your children go off to college? Then saving for a downpayment and unexpected home repairs will be where you allocate money more aggressively. Will your children go to college before your aging parents fully retire? Then college expenses will be a higher savings priority. Take some time to list your upcoming big expenses and order them based on when you will first need to make a payment. But know that it is still important to save for other goals, like retirement and college education, simultaneously. You should especially save for retirement consistently due to the power of compound interest. This step also assumes you have paid off all of your high interest debts and don’t carry any except for a mortgage.
Once you have your savings goals ordered, keep in mind that the order may change. For example, you may be given an inheritance or gift that provides you with a downpayment on a home. Then you could shift the money you saved to the next item on your list. Or, your children may receive a scholarship to college and you are left with extra savings that can go toward your own retirement or perhaps to help aging parents. Save as if these good surprises will not happen, but if they do, reassess where the money should be allocated.
It is impossible to know how to save money if you don’t keep track of it. There are many ways to do this. One way is to set up your own spreadsheet with categories and a daily spending balance. Another way is to use a program like Mint or You Need A Budget. When you are just getting started, it’s a good idea to manually track your spending so that you can get in the habit of presently thinking about where the money is going. After that, a more automated approach may work better for you.
A year and a half after beginning to track her spending, MK still enters her expenditures into a spreadsheet as they occur. This way she knows exactly how much money she has left for the week and how much she has saved by monitoring her expenses. The spreadsheet style works best for her because she has autonomy over her spending decisions and feels like she really knows where she stands.
BONUS: Here is an example of the spreadsheet MK uses to religiously track her family’s spending. Make a copy on your own Google account and use it to your heart’s desire! All of the formulas are already built in. You just have to add your own data and additional dates. Copy and paste current formulas into any additional columns you create.
Von prefers to use separate sub-savings accounts through a bank like Capital One 360. Each sub-savings account is set up for a particular category. She sets money aside in each to reach different goals and accrue money for large bills. She also has a savings account for discretionary expenses like children’s activities, eating out, and clothing. If she knows that she needs to set aside additional money for an upcoming expense, like buying her husband a new work suit, she pulls extra from this account and puts it into another sub account just for that purchase. She has also used an envelope system for additional savings as well.
Ultimately, choose a system that works best for you!
Start by saying thank you to your money. It may sound strange, but each time you make a purchase, say, “Thank you money for buying me these incredible groceries for my family.” Or, “Thank you money for buying me gas for my car.” Or even, “Thank you money for helping secure my retirement,” when you transfer money to your savings accounts. This exercise even works on payday. We can say, “Thank you money for filling up my back account and giving me the resources to meet my needs and some of my wants.”
When we focus on gratitude, we naturally feel more abundant and joyful. We are able to appreciate all that we do have rather than get absorbed by how low our savings accounts may be compared to someone else’s. Money is a tool and if we treat it with gratitude, knowing that it is a precious gift, we are more likely to savor its presence in our lives rather than send it out the door mindlessly.
We are big fans of knowing where you stand financially. When you know your starting point, you know how to save money by making conscious efforts to help that money grow. Sometimes financial growth is out of our control, such as when the stock market is not doing as well as we had hoped (hello, last month) or there is a sudden loss of income (hello, furlough), but overall, if we keep saving and contributing to our accounts regularly in spite of the bumps in the road, that net worth number will grow! And that is a wonderful boost to see how many assets are accumulating as you work hard at saving. Especially while living according to your values and incorporating some of your wants.
On the other hand, if you were to go buy yourself a brand new vehicle and simultaneously book a fancy vacation, you would see your net worth dip significantly. Treating yourself to these things if you have been planning them for quite some time and regularly saving for them is not a negative thing, especially if they are a part of your values. But becoming familiar with our net worth number helps us think through these purchases and find a way to make them that yields the most value.
One of the best ways to get on the right path toward an abundant financial future is to find mentors you relate well to. Some of these mentors may be online even. And it’s okay to follow someone for a while and later decide their style is not for you. When MK first started her financial independence journey, she started out by following Mr Money Mustache. While she learned some great tools from him, including the sheer act of tracking your spending, ultimately she realized his style was too harsh for her and difficult to relate to over time. Especially as her family grew. While they both valued saving for a financially secure future and scaling back from the corporate world to pursue meaningful entrepreneurial endeavors, she found herself adopting a scarcity mentality that she didn’t like. That is when she realized it was time for them to break up. She thus began her quest for new mentors.
Since then, she has discovered mentors who have more of an abundance mindset that better align with her values. Her yoga teacher and Leo Babauta have become great sources of inspiration for her, stoking a sense of gratitude and abundance for all of the gifts she has received in her life.
Von used to follow Dave Ramsey when she first began her financial journey. She enjoyed his Financial Peace course and really took a lot of value from it. She admires his style but over time, she realized that it works better for her husband than it does for her. Her husband supports Ramsey’s philosophy of no credit cards. But Von understands that if you treat a credit card just like a debit card and pay off the entire balance every month (not just the recommended minimum payment), they can be a useful tool.
Von also really admires her dad. Her dad is an accountant, taught her to pay off her credit card balance every month, paid off his house in 11 years, and taught her to only buy what she has money in the bank to pay for. In the digital space, she really connects with Paula Pant’s Afford Anything podcast. She loves Paula’s emphasis on investing in real estate and “boring old stocks.” Von likes how Paula is really transparent about her personal investment strategy.
Essentially, some of the best age-old advice for how to save money is to align yourself with 5 people who are already living the lifestyle you admire and want to lead. It doesn’t matter if they are relatives, friends, acquaintances, or people who are living out your values in the online space.
Now that we have provided you with eight steps to work toward your savings goals with an abundance mentality, it’s up to you to forge your own unique path. Read, listen to podcasts, align yourself with inspiring role models and find your own inspiration. From there, take the pieces of wisdom that speak to you and customize your own journey. You may find themes from different sources that stand out to you. That’s the universe telling you to pay attention. Take those themes and create your own personal vision.
Saving money abundantly and without a sense of deprivation is a great journey that we are all on together. With gratitude, perseverance, and dedication we will all make incredible progress toward living a life filled with our values.
Wishing you a wonderful savings journey!
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