Embarking on a journey towards financial freedom? Discover effective strategies to keep your wallet full and your savings account growing. Let's delve into the art of saving money, mastering budgeting, and cultivating a frugal yet fulfilling lifestyle.
Resist short-termism by keeping in mind your values and goals
Saving not only has financial benefits, it can also improve psychological wellbeing and emotional health.
- Take the time to consider what your overarching values and long-term goals are in life; develop a sense of balance (allowing you to weigh your current needs against your current future plans); and build new monetary habits.
Learn more
It’s vital you first work out what you want, then see how best to use your money for you
- If you learn about money first without laying the psychological groundwork that we’ve described in this Guide, then the danger is you’ll end up being used as a tool by your money
- Another powerful factor that could sway your financial judgment is peer pressure
- Make sure you’re clear exactly what your values are and what is really important to you
Links & books
Money Mindset is a YouTube channel hosted by Brad Klontz that provides advice and exercises on the psychology of saving
- The British charity Action for Happiness provides free tools and worksheets for helping work out what truly matters to you in life
- Apps such as Starling Bank and Moneybox can help you create virtual spaces to save for particular goals
- In terms of books, one of us (Kim Stephenson) wrote Taming the Pound: Making Money Your Servant, Not Your Master (2011) to provide a psychological view of personal finance, including chapters on values, goal-setting, behavior, saving, insurance, couple’s finance and teaching children about money
- Finance Is Personal: Making Your Money Work for You in College and Beyond (2015) is aimed more specifically at readers setting off for college or university
What to do
Define what matters to you – in other words, your values.
- Create a sense of balance between your immediate needs and your more optional or discretionary desires, so that you stay happy and motivated while also having enough resources left over to put toward your overarching, long-term values and aims.
- An inappropriate savings habit can be as bad as an inappropriate balance spending habit, the key is the appropriate balance.
Key points
How to save money
- Spend time reflecting on what really matters to you in life, especially over the longer term
- Strike a balance between your immediate needs and desires and your longer-term goals
- Decide what changes you’re making to give yourself money to save, and try to automate the correct amount
- Reward yourself for behaving the way you want to, not the way your used to
