The most common approach to saving money is to try and save after expenses. This misconception is the reason most people can’t save money and if uncorrected results in lack of financial freedom.The majority of people have money systems that focus on rent, bills and groceries first. As a result of this savings as an afterthought rather than a priority. This approach to saving does not work and to prove it let’s look at the stats:

For both the UK and the US the figure for people with substantial savings is pretty dreadful. I know there are socio-economic issues that are a major reason people genuinely can’t afford to save money. However, I know many people in my age-group, in my job industry, same company and even the same job role, that live pay-check to pay-check. Despite how much they seem to try, they can’t save money and wish the month away waiting for the next payday.

This is because they are making a crucial money error and their approach to saving money is fundamentally flawed. By contrast, successful savers turn the money-saving game on its head. They do this by making just a small change and once done saving money becomes effortless and automatic.

You Should Always Pay Yourself First

This one change is to orientate your finances around your savings rather than calculating what might be left to save after your expenses. You can literally pay yourself first by making sure that money automatically goes into your savings account either at the start of every month or once your paycheck hits your account.

The main thing here is to ensure that when you create your first budget, you order it in reverse. This means that you put your savings accounts at the top and how much you want to save.Once you have deducted your savings from your net salary, and only then, can you start deducting your expenses. When you approach money in this way, you learn to adjust your lifestyle to meet your savings goals and you put your future first!

How I Tripled My Net Worth In 4 Years

This simple behavioural nudge allowed me to triple my net worth since 2017.By building solid money habits such as this, as my income has increased, my savings have grown in tandem. This is one of the ways you avoid lifestyle inflation.This has made saving money effortless and purposeful. I’ve never had to think about what I can save every month, or how I need to curb my spending to meet my money goals. It just happens automatically. This has not only allowed me to meet my money goals but to live a great lifestyle and travel all around the world.

Personally, I like to orientate the amount I save each month around my journey to financial freedom. This gives the money I save a purpose, which is paramount. In this case, knowing that this money will allow me to retire from the rat race in just 15 years time.Using my financial freedom calculator I have worked out how much I need to invest each month to retire by a given date. You can access this calculator by clicking on the link below.

Set an intention for your money and know exactly how much you aim to save each month. This works because your spending constricts to meet your goals. Without this intention your spending will expand until it consumes your entire income.

Why Paying Yourself Last Doesn’t Work

By contrast, if you have to have to stop spending money mid-month to hit a savings goal, this will only result in saving money feeling painful. This is the single biggest deterrent to saving and the reason most people can’t save money. If you constantly have to review your finances to figure out how much you can save each month, then it’s not going to work. Not only do you have to try and figure this savings number, you then need to apply willpower doing it. All of which requires a significant amount of effort. On the other hand, if you save money first, then what is left is free for you to spend, guilt and pain-free. Paying yourself last is one of thethree common money mistakesthat cost people their financial freedom.

How To Change Your Money Habits Today

The majority of people think it’s difficult to save money because they approach saving in the wrong direction. If you are one of these people, you can fix this today and it will take less than 20 minutes. There are two simple actions you need to take and that’s it!

  • Step 1: Use this completelyfree reverse budgetcalculator to figure out how much you can save.
  • Step 2: Set up direct debits from your current account to a savings account of your choice.

That’s literally everything you need to do. If you want a step 3 to this strategy then I would recommend you use mynet worth trackerto help your savings grow every month. If you don’t bother to set up successful financial systems like areverse budgetand automated payments then you will struggle and ultimately fail to save money.

You can set all the goals, plans and dreams you want but without this specific money approach, you will be broke like the majority of people. Without consistency, you will never achieve your money goals and this will leave you feeling regretful about your finances. However, If you take action you will make your life easier and you will feel proud for successfully building wealth. In fact, you can also download myfree financial checklist, and tick off the steps to financial freedom.