The easy ways to start saving money start with small habit changes, not broad sweeping budget cuts. Which is great because it means you don’t have to give up your favourite activities! You don’t to give up holidays, shopping trips or decline social events. You can continue to buy all the coffee and wine you want (to a limit).

When evaluating my finances I always look to cut unnecessary expenses. I do this by identifying bad habits and replacing them with better ones if possible. This is one of the easy ways to save money. When you identify a habit, you can then calculate the cost over time.

What Are The Easy Ways To Start Save Money?

Let’s take the commonly cited coffee as an example. We all laugh but it’s no laughing matter when you run the calculations. By swapping out a daily behaviour with a lower cost, more enriching habit, you could save around £626 a year. This is based on just one coffee a day. Invest this money and it could turn into £62,669 over a 25 year period. In fact, it’s estimated that the UK coffee market is worth 9.6 billion a year.

However, giving up coffee isn’t going to completely revolutionise your finances. Yes, at best you will save that £626 a year but who is actually going out for coffee once a day anymore. In fact who is making it out once a week to get a coffee in this covid-era. By contrast, I actually just purchased a bean-to-cup coffee machine, making it even less likely that coffee will become a budgeting problem. Although I did just buy 1kg of Burundi Coffee from a local roastery for £24. At this point it could swing either way.

Households in the UK spend 13% of their income on recreation and culture. 9% of their income on restaurants and hotels. A further 8% goes on miscellaneous goods and services. As you can see there are all these pockets of spending that we can tackle to save ourselves more money.

How much do you spend on food, utility bills, and transport every week? You can compare yourself with the average family in the UK using the interactive tool below. Although you mind now necessarily know how much you spend on all these items (read on to find out how you can get this done for you).

(*Disclaimer: This article is not financial advice. You are responsible for your own financial decisions. This article may contain affiliate links)

How To Identify A Financial Problem

The psychology of habit has been deconstructed by some great studies. It’s also been synthesised by some even better books such as James Clear’s Atomic Habits and The Power of Habit by Charles Duhigg. In both of these books, the process of building a habit can be divided into four simple steps: cue, craving, response, and reward.

Breaking down your spending behaviours into their fundamental components can help us understand what a habit is, how it works, and how to improve it.

1. The Cue triggers your brain to initiate a behaviour. It is a bit of information that predicts a reward.
2. Cravings are the second step of the habit loop, and they are the motivational force behind every habit. Without some level of motivation or desire—without craving a change—we have no reason to act.
3. The third step is the response. The response is the actual habit you perform, which can take the form of a thought or an action. The response delivers a reward.
4. Rewards are the end goal of every habit. The cue is about noticing the reward. The craving is about wanting the reward. The response is about obtaining the reward.

Easy Ways To Start Saving Money:

If you want to find some easy ways you can start saving money. All you need to do identify the behaviour you are consistently engaging in, that’s costing you a significant amount of money. This is where tracking your expenses with a money app like Snoop comes in handy. Snoop is a great example of how safe and secure technology can help us manage our money. Snoop monitors your spending and auto-categorises it. It’s one of three apps that are great for budgeting and tracking your spending.

Snoop will group up your spending into categories and merchants. This means that you can simply open the app and see where your money has gone. This is essential information because you can then targeting specific categories of your spending (the reward). If you want to go deeper, you can deconstructing that to the action and the cue that caused that spending. You can then adjust your behaviour accordingly.

However, be warned simply trying to cancel out a habit is likely to fail. It is far easier to replace that habit with a better one and in essence override the neural pathways that move you from cue to response. It’s part of the reason there is a high rate of people who fail to give up smoking because of cravings. It’s also part of the reason Vaping has become a $15 billion market. Many smokers have simply replaced the routine of smoking, from cue to reward by a very similar behaviour.

How To Change Your Financial Behaviour

Start with an incredibly small habit and make it easy enough that you cannot say no. We essentially want to remove any feelings of willpower or motivation. This is because your willpower will be fatigued every time you need to use it. It’s a very limited resource. It rises and falls and if you rely on it, it will eventually fail you! So we start small and increase your habit in very small ways.

Simply breaking your spending into chunks is the first little step. Then when you try to save money, rather than trying to cut everything and anything from your spending, start with small categories of your spending. It probably won’t hurt or drain your motivation to cut them out.

They’re probably unnecessary expenses. You can work your way up through the bigger categories of your spending. Should you fall back into bad habits then track back quickly to the route or trigger of the spending. It’s important to keep overriding this behaviour with a newer and healthier one and be consistent with it.

Many people give up with budgeting or trying to save money because they feel they have failed with it. Like how many people start going to the gym in January but then they don’t lose wait or miss a week and then the game is all over. Expect to fail if you are trying to budget, you’re spending will ebb and flow. The important thing is be patient and stick to a pace you can sustain.

How To Build Positive Money Habits: 5 Easy Ways To Start Saving Money

James Clear highlights of 4 key factors that lead to positive habit change. He argues that in order for a new habit to stick it needs to be obvious. These 4 laws are based around the cue, craving, response, reward behaviour flow mentioned earlier in the article. Essentially you need an obvious cue that kicks you into gear. You have your new habit:

1. Obvious.
2. Attractive.
3. Easy.
4. Satisfying.

Money management apps tick all of these boxes because they make your spending obvious with notifications and awesome visualisations. The Snoop app also gives you insights and opportunities of where you can save money (easy and satisfying).

Reducing the friction between being able to actually save money and getting the reward of seeing it grow is key. There are some great banking apps (my personal favourite is Wise) that allow you to open a new ‘jar’ within seconds and start saving or even invest invest into the stock market. Opening a Wise account is also the best way to save money when you travel and spend internationally. You can even save up for your next trip in a specific currency or convert your money when you get there for super-low rates.

Once you make it easy to save money it becomes a reward in itself. This is why it’s super important to track your net worth or transfer the money you save into a separate ‘jar’. This is why you take the next 3 steps:

1. Download the Snoop app to make it easy to track your spending
2. Open up an account with Wise and create your first savings jar (or as many as you like)
3. Every-pay day transfer your savings into your savings jars.

Summary

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Easy Ways To Start Saving Money: Small Habit Changes You Can Make

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The easy ways to start saving money start with small habit changes, not broad sweeping budget cuts. Which is great because it means you don't have to give up your favourite activities! You don't to give up holidays, shopping trips or decline social events. You can continue to buy all the coffee and wine you want (to a limit).

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Andrew

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Money Side Up

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