There is an unfortunate trend in North America of people not saving enough to sustain themselves in retirement. On top of that, people are also not saving enough for an emergency or a rainy day. Too often, we rely on debt to get us through tough times instead of thinking and planning ahead.

This is something that needs to change. In a couple of decades, when people are just too old/and or disabled to work, but have a mountain of debt and no retirement savings, what will become of us as a nation?

I’m convinced that habits can be the single most effective thing to help you achieve something. When we think of habits, we often think of bad habits like smoking, chewing our nails or saying “um” a lot, but there are plenty of good and neutral habits that we have.

You don’t actually think about turning off a light when you leave a room; it’s a habit. You don’t have to make yourself close a drawer when you open it for something; that’s another habit. You can build habits to be incredibly positive.

So, I propose that you make a habit out of saving.

Review Your Balances and Spending

I’ve gotten into the habit of logging on to my bank account and credit card accounts when I first wake up and open the computer. Often I am already logged in before I realize what I am doing.

Knowing what your balances are (ie, how much you have in your account or owe on your credit card) is key to intuitively knowing when you may need to be a bit more frugal.

Ignorance is bliss, especially when it comes to overspending.

This brings me to my next point: make a habit of reviewing your spending. Every day, week, or in whatever pattern you find most effective, total up how much you’ve spent on different categories that week. Pay close attention to your weak spots. Mine is restaurant spending, so making a habit of checking how much I have spent does a lot to reinforce making dinner the next day.

Make a Habit of Transferring Money

It’s my habit to check my pay statement each payday to ensure that it is correct and I wasn’t under or overpaid. After that, it’s my habit to transfer a portion of my pay to a savings account that I can’t touch; whether that’s my RRSP, my emergency fund or my TFSA.

Because it’s a habit, it’s not something I have to convince myself to do. In fact, I’d have to set reminders to ensure that I didn’t just automatically do this if I wanted to take a different approach to saving.

Habits are powerful because they transform something that we aren’t used to doing, into something easy and intuitive.

Make a Habit of Questioning Yourself

Financially, many of us are impulsive. We’ll grab a pack of gum in the lineup at the grocery store that we weren’t planning on purchasing out of impulse. Maybe we’ll see an ad on television that makes us want a product and we’ll log onto our favourite online shopping center to purchase it.

Building the habit to question yourself, by asking whether you really need the item, want the item, or whether the ad or the marketers who arrange the supermarket product placement are just taking advantage of your impulsiveness.

You have control over your own spending habits but often we don’t question ourselves when we make a decision to find out what is underlying.

Making a habit out of analyzing each purchase, even if you do really need it, will help you control impulse spending and therefore help you save more.

 

How have you built habits to support a strong financial future?