Once a friend told me about his biggest fear. That fear used to be checking his bank balance, because once he did, instant depression! He just could not deal with the fact that he won’t be able to afford to treat himself an oversea trip. The reason is because he couldn’t control his spending.
It was an endless cycle – Fear, then compulsive buying, incurring debt and then more fear! Trust me, I know how hard it is to break out of that cycle and to tell yourself to be patient. I used to be like this to during my first year after graduation. With an engineering degree on hands, I chose the career to be a full-time musician. My income was adequate, even better than a fresh junior engineer. But to fill my home studio with audio and musical equipments, it costed a lot of money.
What I have learned is that, most people make the big mistake of following self-help guides that are not for them. Yes, the internet is a treasure trove of personal finance bloggers who are at the top of their game, but they are generalized and probably won’t work for you. To put it simply, it’s like those quick and simple weight loss guides that promise to reduce your belly pooch, but without someone pushing you, they are pretty much a redundant waste of time. So, what you need is a painless and fun way to improve your bank balance.
1. Play a game and have fun saving
One of the biggest motivators for me, was that I turned ‘saving money’ into a game that I used to play with myself. Trust me, it is a lot of fun!
Believe it or not, life is just like a game. When I first got my own personal computer in university days, I spent countless nights playing computer games. It was kind of a silly endeavour that most male students gone through at certain point of their lives. Game is fun because whenever you play, you get better and make progress. And simple enough, real life works just the same!
Later, I realize that playing computer games is not productive. It is better to play the real life game and make progress. Game is designed to reward you whenever you make progress – upgraded armor, more coins, more gems etc. Similarly, to make your money-saving program fun, you need a reward system in place.
You can customize this game to fit your purpose. You can hand over paycheck to your spouse or a family member who is trustworthy and be sure that your bills will be paid at the end of the month with money to spare. The spare money will only be lent back to you if you reach a certain goal. For instance, saving up to at least RM1000, will get you to ‘withdraw’ a certain amount from whoever is holding onto your money.
You can also compete with friends and family who are going through a similar situation and can motivate each other, and whoever saves the most will owe you a ‘favor’, for instance, cooking for you or giving you a ride if they have a car. I used to make my roommate clean our room after cramming for an exam, totally worth it! Get inspired and make your own little game and make sure to have fun saving money!
2. Get intimate with your money
Research shows that it is more painful to spend cash than using your credit card. I know that the prospect of owning a credit card is very desirable, and the fact that you can spend more than your means, makes the situation worse. So, when you couldn’t control your spending, the first thing you should do is to chopped off your credit cards and used your brother’s (or sister’s) for emergency. Trust me, your sibling won’t let you swipe theirs easily.
Now, it is more satisfying to open your wallet and actually see how much I’ve got! On the other hand, another study shows that the more worn out your notes are, the more prone you are to get rid of them. So, exchange your notes for fresh ones regularly.
Another trick I learned from my mother, was to hide a little chunk of money here and there. Fill up those hiding spots, the more the better. You wouldn’t even realize how much you’d be saving up!
Another more popular way to get personal with your finances is to use the various budgeting apps out there. Install a few and stick to the one that you can master. Make a habit of using this app like you use Facebook. Blog about it and let everyone know about your milestones. Inspire others to come and accompany you on your odyssey!
3. Give your money the value it deserves
What if we could turn back in time, to the old ages where we had no currency, but a barter system? Yes, you can do that! Assign scary tags on the amount you are about to give up due to temptation. For instance, let’s consider a Starbuck Coffee that costs RM 15.00, That’s one week worth of transport fee right there! Will you walk all the way to the office, if it’s far, every week? Because face it, that is what you have to forego if you get that coffee.
Just like this, assign tangible values with equal weight of importance, e.g. rent or interest on debt, etc. In this way, you would be discouraged to spend and encouraged to save. On the other hand, while keeping change for parking fees or other absolute necessities, keep only notes with large value e.g. RM50 or RM100. That used to work for me, because it was painful to give the cashier an entire note of RM100 for a RM15 coffee! It’s all about playing mind games.
4. Water your money regularly so it grows
Hold on! I’m not talking about a mythical plant that rains currency notes if you water it regularly. On the contrary, you should focus on reality and make your money go to work and earn for you! Instead of saving up to buy a new Smartphone or blowing it all up on your mortgage, you can add to your retirement nest egg!
What most people fail to realize is that you need to start saving for retirement from your twenties! The longer you save, the more you save. Apart from inflation, there is rising potential for technology to replace us, and getting work in an old age is another pain, so better be safe than be sorry.
Alternatively, you can add to a savings account. But saving money in bank account is as slow as snails. That will earn you interest but a better option is to invest. However, bear in mind that investment comes with risk. The only way to reduce the risk while enjoying good rate of return is to get educated about the investment vehicle. Investing your money is the only way for future financial security.
Bottom line, make every day a fun, new experience to look forward to and customize each saving opportunity into a new game. With each passing day, saving will become as easy as checking notifications on Facebook!
Don’t forget to share your game ideas with me! Have fun and good luck!