Looking for some tips on how to save money? Then you’ve come to the right place. Fed up suffering just to save a little extra money. These genuine ways to boost and maintain your savings will help.

If you want to maintain a high savings rate you will need to find a way to save money without suffering. As the duration of time increases our motivation to save often decreases. You need enjoy your life and do the things love to do whilst saving.

8 Tips On How To Save Money (without even trying)

Research has show than by being restrictive we end up overcompensating in other areas. In which case, you might as well not bother trying to save in the first place. Nudging your brain into effortless saving is the way to go. These 8 tips on how to save money will do just the trick.

The best tips on how to save money are those which give you the psychological edge on your finances. You need to learn to save money without even trying.

#1 Track Your Spending

The first of the tips on how to save money is to track your savings. The by-product of this is that you will cut unnecessary expenses. Once you track your spending, you’ll realise how many unnecessary purchases you make. This helps you to focus on more meaningful experiences or value-orientated purchases. Trimming the fat from your finances, can make you feel happier. You don’t have to think as much about what you want to buy all the time.

This experience is backed by science, decision making is an energy consuming process and can result in decision making fatigue. Some sources say we make as much as 35,000 decisions a day. It makes sense that reducing the number of decisions you need to make would result in improved well-being. In fact many top entrepreneurs wear the same clothes every day in order to reduce the number of decisions they have to make. This is so they can focus on the important ones and delay the on-set of decision fatigue.

#2 Apply A Purchase Decision Funnel

Being a paralyzingly indecisive person it makes sense to remove the decision all together or streamline the decision-making process. It can also reduce the level of anxiety you feel when you do actually want to buy something.

When humans are confronted with multiple choices this can actually result in stress or unhappiness with making the right decision. Numerous studies have been carried out on this and these can be applied to frugality in a number of ways. To understand more about this, watch this Ted Talk by Barry Schwartz on the ‘paradox of choice’.

Some people choose to have no spend time periods, removing the paradox altogether. Others a spending limit which restricts the number of products available to purchase. I tend to orientate towards a value-based decision-making process:

  1. Do I need this product?

  2. Alternatively, do I just want this product? If so, why?

  3. What is the lower, upper and average market value of this product?

  4. Can I find a value for money product that matches or beats this price?

  5. Does this product have longevity?

  6. Will this product make my life easier or have the potential to bring long-term happiness?

  7. What is the short, medium and long-term impact on my finances?

#3 Break Your Bad Habits

I love coffee! Sometimes a little too much and I have to cut back. This can be tricky and it’s too easy to just grab another cup each time I visit the kitchen. When it comes to food and drink we’re all very habit driven. Taking a break from work seems to coincide with going to the kitchen for a hot drink. It took a little experimenting to actually figure out my coffee ritual and cut back.

Swapping out a coffee for a fruit tea was enough to fulfil the ‘hot drink ritual’but was a simple way to cut back on coffee. It’s the same when it comes to money and if you are prone to takeaways or eating out, then you need to find a simple substitution that will kick-in before you impulses do.

It’s trial and error with replacing bad spending habits with good ones. You can’t simply stop a bad habit and you have to replace it. Over time good habits can build a solid foundation, making it far easier to save money without suffering.

#4 Create Reward Cycles To Reinforce Good Habits

A habit consists of three parts; cue, action, and reward. Making purchases is like a reward to the brain, this has been further magnified by clever marketing and consumer psychology. Contrary to this, stopping yourself from making purchases can feel negative and give you a sense of missing out.

It’s key to breakdown our spending habits into the three elements of habit. A cue might be boredom or stress, which results in the behaviour online shopping and the reward a new pair of shoes or a gadget. Alternative cycles may be used to replace the behaviours with better, more rewarding behaviours such as exercise, going for a walk or reading.

Unnecessary purchases might bring and instant serotonin hit to the brain but they don’t add long-term reward to the brain. Even the feel-good factor of necessary purchases diminishes over time. Understanding these behavioural patterns of cue, action and reward cycles is important in order to save money.

#4 Track Your Net Worth & Start Today

This is one of my favourite tips on how to save money. Tracking your monthly net worth and seeing it rise is a major moral boost. Especially when the stock market is soaring as your net worth grows exponentially. Even just seeing money go into your account, is a reward. Personally, I feel this is more rewarding than material wealth. A mindset of minimalism and frugality results in a shift in this cycle.

Tracking your net worth reverse the feelings ofloss aversion. Instead of feeling like you’re missing out by not buying something, you visualise the impact on your savings. Tracking your net worth can become a real cornerstone habit and this sets your savings rate on fire.

Once you start to associate saving money with a long-term goal such as financial independence retire early, you see spending as a set back to achieving early retirement. If you want to read more about how to change your habits I would recommend the Power of Habit: Why We Do What We Do, and How To Change by Charles Duhigg. This book is full of great insights into the science of habit on both a personal and commercial level.

#5 Identify Your Baseline Your Level Of Happiness

This is one of the most important tips on how to save money. You need to find your baseline level of happiness. That way you know how much to cut back on your spending without making you miserable. Slowly reducing the amount you spend will naturally acclimatise you a lower level of spending. You’ll then start to save without suffering. Don’t try to go too fast.

Paying yourself first is the best way to avoid getting to the end of the month and realising you don’t have any money to save. It will also set the baseline for how much you have to spend. For example:

  1. You might earn £2,000 a month and I automatically pre-set a saving of £500.

  2. Deduct £500 for bills

  3. Your brain will then adjust to the fact that you have £1,000 left to spend.

Elements of spending that have a variable impact on happiness. By experimenting with what you can cut out, you learn what your natural baseline is. This happiness baseline is known as hedonic adaptation.This approach will allow you to find a balance between spending and happiness.

tips on how to save money: baseline happiness and spending
Visualisation Of The Hedonic Treadmill

#7 Keystone Money Saving Habits

Tracking your expenses or budgeting is not simply a restriction of spending but a keystone habit. These are habits that underpin or trigger other successful habits. In health terms, an equivalent would be a food diary, which has been shown to more than double the amount of weight loss. It’s important to remember that the small purchases can be death by a 1000 cuts. If you fancy giving your spending tracking a go, here are the steps I would recommend:

  1. Breakdown all spending into categories. I use Money Dashboard in order to do this.

  2. Split spending into groceries, travel, home, bills, appearance, media, fun purchases.

  3. Try to avoid using the category miscellaneous. However, you may find you need this at first, then split this out later.

  4. Target and reduce unnecessary spending by category.

  5. Start setting max spends. You may need to make small adjustments each month to start as your spending by category will peak and trough.

  6. Identify which habits and spending trends you can trim by category.

  7. Decide what purchases are needs vs wants in terms of purchases.

#8 Make A Commitment To Saving For Your Future

One of the greatest barriers savers faces is winning the battle between the needs of the present vs future self. This is known as present bias by behavioural economists. It explains the tendency for people to give stronger weight to payoffs that are closer to the present time when considering trade-offs between two future moments. there is evidence to show that speaking a futureless language can actually improve savings rates.

You need to reduce the dissonance between your present and future self. The way I think about this is the more I save now, the sooner I can retire. You have to aim for specific goals and aspirations when it comes to saving. This way, you’re not sacrificing for a very long-term unimaginable day. The impact is then more imaginable, easier to visualise, almost tangible.

By contrast, not saving enough becomes a very painful reality. Increasing your savings rate, especially during a bad period of your working life, can even alleviate negative feelings. Research also shown that pre-committing to a set savings rate is one further way to improve your savings. That’s because it helps to create a more continuous self-image. This pre-committing to saving can also reduce the perception of loss in disposable income that can come with saving.

Final Tips On How To Save Money Without Suffering

Automation is also key in to saving money. Constant money decisions result in decision fatigue and result in feelings of loss aversion. Especially when it comes to investing. Automating your savings and investments with a direct debit makes saving eases and naturally increases spending friction. As we’ve seen making a pre-commitment to your savings and future self can help.

Pursuing Financial Independence has taught me that less is more and that saving can be a reward and not a sacrifice. It just needs balance but in the long-term can help yourself identify and seek what you find truly rewarding. Building up good automated habits will go a long way to helping you save effortlessly. With some easy behavioural changes, you can nudge your brain into saving more and saving without suffering.



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8 Tips On How To Save Money Without Suffering
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8 Tips On How To Save Money Without Suffering
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Looking for some tips on how to save money? Then you've come to the right place. Fed up suffering just to save a little extra money,
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Money Side Up
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