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- I asked five financial planners how they get their clients to save more money, and they shared unique tips, mental tricks, and creative strategies.
- Embrace small savings to start, then raise your savings rate as you edit your budget and earn more.
- You can also turn your savings into a game by having no-spend days, or creating a "matching" program where you save as much as you spend on non-essential items for yourself.
- Check out Vanguard Personal Advisor Services® to get the investment advice you need to help build the life you want »
Want to save more money but just can't seem to make savings a habit that sticks? It takes a lot of focus and discipline to consistently save money (especially when the temptation to spend abounds).
I talked to five financial planners to get some fresh ideas on effective savings strategies they've seen work for the clients they serve.
Here are their systems, mental tricks, and unique bits of advice on what to do to increase how much you save.
Embrace starting small
"Small, but consistent, increases in your retirement savings rate will help to put you on track financially for later in life — even if you don't feel particularly excited about putting money toward that purpose right now," says Kevin Mahoney, Certified Financial Planner (CFP) at Illumint.
How small is small? Mahoney says increasing contributions to retirement accounts by just 1% at periodic intervals can make a big difference. He suggests using different prompts on the calendar (like the start of a New Year, a birthday, or a seasonal change) to make these gradual increases.
"The key to strong long-term savings rates and dollar amounts lies in constant progress," Mahoney adds.
Create your own matching program
It's common for companies to raise money for charities by promising to match donations. If you give $50, then they'll match it — that sort of thing. And you can do the same for yourself.
"If you can afford to buy something that you don't necessarily need, you may also be able to afford more savings," points out Justin Pritchard, CFP and founder of Approach Financial, Inc.
"For example, if you purchase a $350 toy, whether it's a scooter, a surfboard, or something else, is there a way to add $350 to your savings? You might plan to do that over several months or in a lump sum."
Pritchard says this approach ensures that you don't spend all of your money on wants, but you still get to enjoy the present as you prepare for the future. "It raises the stakes when you spend money," he adds, "which may lead to more mindful spending."
Leverage any income increases you get
Jim Blankenship, CFP and founder of Blankenship Financial Planning, believes you should enjoy the money you worked hard to earn.
"You should reward yourself for the hard work," he says, "while at the same time using this as an opportunity to increase your savings rate."
He suggests breaking up any increases in pay and allocating some to discretionary spending and the rest to savings. Set up an automated contribution so that 75% of the increased cash coming into your bank account goes to savings or investments, for example, and freely enjoy the other 25% for spending.
"This can be a lifelong strategy, especially if you're in the type of job that has an annual pay increase cycle," he adds. "In no time at all you're saving at a much greater rate than before, and you hardly noticed it."
Get super precise with your budgeting strategy
Most of us want to save, but it's tough to do so if you get to the end of the month and there's just nothing left to contribute toward a goal. That's why Jovan Johnson, CFP and co-owner of Piece of Wealth Planning, helps clients set up a zero-based budgeting system based on their personal priorities that provides a job for each dollar.
"With this budgeting system," Johnson explains, "if they run out of money in the entertainment category for the month, then they will have to wait until the next month or use funds from a different category."
Categories include not just what you might want to spend on, but what you want to save up for as well. "I have found that when we attach specific goals to savings accounts, it motivates us more to save money," says Johnson. If something is important to you, make it a line item in your zero-based budget.
Make savings a game you can win
Ryan Sterling, a financial planner and the founder of Future You Wealth, says gamifying your spending and savings habits can be a good way to get a handle on aspects of your financial life that you might struggle with.
Sterling comes up with games and challenges for his clients to embrace each month. "Examples of this include no-spending days," he explains. Other games include a "cash-only" week, where clients can only make purchases in cash for one week out of the month, and what might be the most unique of all: "Happy hour month, where for an entire month you just go out to eat at places and times with happy hour pricing," says Sterling.
He believes gamifying your spending is useful because it "ignites our competitive spirit, forces us to embrace our creativity, and it gets us to associate saving and budgeting as a fun activity."
If making a game out of your money doesn't sound like your idea of fun, Sterling proposes creating your own money rules instead. "I have clients come up with a list of their money and spending rules. Creating money and spending rules brings personal values to the surface and allows clients to say 'yes' to spending money on things and experiences that are in alignment with their values, and 'no' to what adds little or no value."
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