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  • Timothy Iseler

Foundational Money Habits 2: Saving

This post is the second of a series on four foundational habits that anyone can use to improve financial health. You can read the previous one here or next one here.


There are a million ways to do anything, but my advice is always to start with small, manageable, and repeatable actions to build good habits. Having a good relationship with money has little to do with a high income and how much nice stuff you own and everything to do with living within your means and saving what you can.


Making big, sweeping changes all at once can set you up for disappointment when you inevitably hit a bump in the road. Instead, start small with actions you know you can manage and let those small victories build into something you can be proud of. Here are four easy to understand foundational habits that anyone can start using today:

  • Spend a little bit less than you want to.

  • Save a little bit more than you have been.

  • Pay off debt a little bit faster than you need to.

  • Invest what you can when you can for the rest of your life.

I consider those four topics – cash flow, saving, debt management, and long-term investing – to be foundational to good financial health. I start each client relationship with a review of those fundamentals to establish a baseline (where are you right now?) and identify easy to understand practices that can help build the habits that will take you where you're going. There are certainly other important topics in personal finance, but getting those four right will set you up for a lifetime of positive financial health.


So let's dive into the next topic and identify a few easy to understand ways to build good habits!


Save a little bit more than you have been.


There is a push-pull relationship between saving and spending – the more you spend, the less you save and the more you save the less you can spend. In other words, a lot of savings tips also improve spending habits and vice versa. Here's that equation:


What You Earn - What You Spend = What You Can Save


Your savings represents all the potential you will ever have to change your circumstances in the future. I want to enjoy my present as much as the next person, but tend to think that having more options in the future – including the option to work a little bit less – is a good thing. Luckily for us, saving is one of the simplest money habits to put on autopilot.


The common way many people think about saving is something like, "I buy what I need to buy and whatever is left over I can save." While that's true, I think it puts the cart in front of the horse. Consider two scenarios: 1) I hand you $100 and say, "use this money however you want, but save whatever is left" or 2) I hand you $80 and say, "I already set aside $20 in your savings account, so go ahead and spend all of this without worrying". Which version seems easier to you?


Rather than waiting to see what remains after bills are paid and groceries are bought (and a treat now and then because you should have some fun), it's easier & more effective to save before deciding how much to spend each month.


Here are three ways you can build positive money habits by saving:


  • Automate contributions to retirement accounts – This is easy to do if you have a workplace account like a 401(k) where the contribution is taken out before you receive your pay, but only takes a small amount of extra effort when contributing to an IRA or self-employed retirement account like a SEP IRA. Pick some target amount that you know you can live without each month and schedule recurring contributions on an easy to remember date (like the first of each month). Pro tip: it's better to start with an amount you know you can manage, rather than choosing a "perfect" amount that might cause stress down the road. You know what happens when new habits become stressful? People give up. Better to start small and adjust up once the habit is well-established. Could you save a dollar a day? How about $10 per week? Or $100 per month? Focus on finding an amount and frequency that feels effortless.

  • Out of sight, out of mind – I've found that I am very loose with my spending when my checking account is flush with cash, but quickly become frugal when I notice the balance dwindling. Does that sound familiar? You can use that tendency to your benefit by establishing a target maximum balance for your checking account and transferring everything above that amount into a savings account. Bonus points if that savings account is at another bank – that extra friction of waiting a day or two for transfers means you will be less likely to grab money from your savings for impulse buys. By limiting how much of your money sits in your checking account, you can manage both spending & saving with one easy to remember rule (especially helpful for self-employed people).

  • Use the 2x Rule – (Full disclosure: I am 100% ripping this off from Nick Maggiulli's book "Just Keep Buying".) Whenever you want to splurge on something nice for yourself, commit to saving an equivalent amount for the future. Let's say that I want to treat myself to a brand new fitted Durham Bulls baseball cap (the season starts in just over four weeks!) at the going rate of $38. Before buying it, I would also need to commit to saving $38. If that 2x price tag changes your opinion, perhaps you should wait on the purchase. On the other hand, if you decide to go ahead and splurge, you can feel better about your treating yourself because you also made an equivalent positive decision for your future. Huzzah!

I'd love to hear any of your helpful tips & tricks for building low-stress savings habits! Send me an email to drop me a line! Next time we'll look at how to take some of the stress out of paying down debt. Thanks!



Timothy Iseler, CFP®

Founder & Lead Advisor

Iseler Financial, LLC | Durham NC | (919) 666-7604


Iseler Financial helps creative professionals remove stress while taking control of their financial futures. As both advisor and accountability partner, we help identify current strengths and weaknesses, clarify and refine your long-term goals, and prioritize understandable, manageable, and repeatable actions to bring long-term financial well-being. Reach out today to take the first step.

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