Essential habits of a successful saver

Savings is a way of growing money. Savings should be considered not only for short-term financial objectives but also for long-term objectives. As such, savings should be made a habit so that even smaller savings amounts are not missed. It is not just any habit that helps a person to save. There are number of habits a successful saver is aware of and put into practice to achieve financial success.

This post will cover five habits of a disciplined saver so that anyone can learn to maximize their savings to build a successful financial future. Read on to see what habits you have and what habits are new to you.

Habits of a successful saver:

  • Desire to reduce expenses
  • Regular savings
  • Knowing what is owed
  • Having a clear sense of earnings and potential earnings
  • Having one or more financial goal(s) or vision(s)

Desire to reduce expenses

A successful saver knows the importance of reducing expenses. Therefore, each time she is spending money, she is thinking about saving on expenses. It is no-brainer money saved on expenses can be used somewhere else or better yet can be put into a savings account to earn interest (to let the money even grow further). So how does one go about reducing expenses? Here are some key factors that a successful saver considers to reduce expenses:

  • Setting up of a budget or allowance (daily, weekly, bi-weekly, monthly, or some other time-period) and closely following it. Further review of the budget often reveals more ways to save.
  • Desire to resist borrowing because of the associated expenses of using someone else’s money.
  • Use of coupons. Depending on a coupon, discounts can range from less than a dollar to more than a $100. Of course, use of more than one coupon means even more increased savings.
  • Knowing shopping without a shopping list is a mistake. Shopping lists help shoppers resist buying items that are not needed.
  • Knowing the difference between needs and wants when it comes to purchase decisions. If an item is on sale, it does not imply one will need it.
  • Understanding consequences of not paying bills on time. Paying bills late often results in more fees and even reporting to credit agencies of the late payments.
  • Finding own ways to save (such as carpooling, preparing own food instead of purchasing prepared food, renting a video instead of going out for movies, and so on)

Regular savings

Regular savings, regardless of the amount, is part of a successful saver. She is disciplined to save little by little. To keep the savings safe and grow by means of interest, she knows she does not want to be without a savings account. A person with an attitude to save knows a savings account does not alone increase the savings. It is rather the act of regular additions of funds (i.e., $10 or $20 for each pay period) to the account that help savings grow. What easily erodes the savings? Paying fees or taking money out of the account for non-essential expenses. The temptation to spend the saved money is a remote option for a smart saver.

A disciplined approach to regular savings is to have an automated and occurring deposit to a savings account from a checking account. Doing this ensures a person never miss to save. Of course, delayed savings is not probably on a successful saver’s mind.

By the extension of savings, it is not a bad idea to save for financial emergencies. Financial emergencies can happen to anyone and at any time. As a result, there is no time to prepare when a financial emergency strikes. Planning ahead for such emergencies is a smarter way to handle them.

A successful saver is not without an emergency fund. She knows to regularly add money to the fund to let it grow, separately from a regular savings account.

Knowing what is owed

A successful saver has to know what she owes; otherwise, she would be spending money like if there is no tomorrow. By knowing the current level of debts, she is wiser about her purchase decisions. No surprise a successful saver with a watch on her debt knows:

  • What is owed every month on her mortgage or rent
  • What she pays in interest on her all debt
  • She knows what amount she owes on credit cards or other bills (unities, internet/phone charges, and other expenses.)

A successful saver always tries to:

  • Avoid going deeper into debt
  • Find ways to pay off current debt faster and avoid falling behind

Having a clear sense of earnings and potential earnings

Income is also on mind of a successful saver. She understands earning money is not only how she can pay her expenses and debt but also save for future. Without regular income, she won’t be able to satisfy her creditors and build a better financial future.

If income drops unexpectedly (and temporarily) she is well prepared to handle the situation. She can, for example, find alternative source of income, consider reducing expenses, or a combination of the two.

Having one or more financial goal(s) or vision(s)

Financial goals are important to any successful saver. The goals help people guide their financial decisions and help them enjoy and maximize their financial freedom. Financial goals are often tied to

  • Increasing savings or income
  • Reducing expenses or debt
  • Naturally, a successful saver wants to increase their income and savings. Thus a savings goal is all about maximizing what a person has or owns, or anticipates receiving. I want to regularly save for my child’s education is an example of a savings goal.

Contrary to increasing income and savings, a successful saver wants to keep expenses and debt low as possible. I want to save $10 each month on my electricity bill is an example of reducing expenses.

A successful saver does not have just one or two goals; she may have many goals. In fact, she may a list of financial goals she wants to accomplish. She understands having a list of dreams does not alone make a financial difference. So what does? A commitment and a positive attitude (to adjust to the changing situations) are the keys to make dreams a reality.

Posted on 1/7/2008
by Raj Singh