Ways to Make Saving a Habit

by Andrea Coombes

What's your excuse? When it comes to the sorry state of our finances, we've all got one.
Maybe your raise at work never materialized, or you charged that unexpected car-repair bill -- or that plasma TV -- to your credit card. Whatever the reason, for many of us, personal balance sheets could look better. Half of U.S. workers report less than $25,000 in savings.
Even if you've saved more, is it enough to sustain you through a decades-long retirement?
Sure, plenty of consumers now are easing back on spending, thanks to sticker shock at the grocery store and gas station. But soon enough retailers and restaurants will be pushing hard-to-resist "recession deals" -- will you be able to restrain yourself? And, what happens to your budget-minded ways when the economy recovers?
It's time to shake off the "consumer" mantle that politicians and economists are so happy to drape around our shoulders. Resist their calls for consumers to save the economy, and resist the advertisements enveloping us in the idea that we need more and more things.
The only thing most of us need more of is financial security. A lot more.
How to get there? Think thrift. For some, it's a familiar idea. For others, thrift implies denial and deprivation, and that makes for a tough call-to-arms.
So, how to save money without scrimping, be thrifty without feeling miserly -- and maintain those habits after our economy picks up speed?
It won't be easy. Expect discomfort, says Kathleen Gurney, a psychologist and chief executive of Financial Psychology Corp. Keep going, even when it's uncomfortable -- the rewards are worth it, and once this economic slowdown ends, you'll have financial habits in place to support you for a lifetime.
1. Spend less time feeling poor. Flipping through catalogs and going to the mall will make you feel like you need things, Ms. Gurney notes. Sure, you can afford some of that stuff, but the main message is: Most of this is out of your reach. Instead, do things that offer a sense of well-being. Invite friends over. Walk in the park.
2. Retrain your brain. Depriving ourselves of current pleasure is nigh impossible if we're not driven by a sense that the future will be more fulfilling, says Ms. Gurney. When you start to feel that "I'm deserving so I'm buying" feeling, visualize a smaller credit-card bill or higher savings-account balance.
3. Look around you. Are you happy with what your hard-earned dollars bought? If not, shift your spending to those things that bring greater long-term satisfaction, including retirement savings.
4. Choose your extravagances. Here is mine: I eat out about once a week. An extravagance I do without: Cable television.
5. Assess weaknesses. "If you were thrifty, how would you look different?" says Gary Buffone, a financial psychologist in Jacksonville, Fla. Identify what you want to change; then shoot for specific targets, such as a six-month hold on buying new tech gadgets.
6. Make trade-offs. Substitute small, free pleasures for those that cost. Have a movie night at home with friends -- you'd be surprised how many people are equally eager to cut costs.
7. Set goals. Meet weekly with family to discuss the spending plan (don't call it a budget) for the months and years ahead. This may involve tough choices, such as forsaking a family vacation. But think of the guilt-free trip you can take after saving the necessary cash. Good memories last longer, Ms. Gurney notes, when not trammeled by large credit-card bills.
8. Resist your children. They're going to find it hard to change their expectations. How can you help? Stand firm. The next time they clamor for the latest videogame, remind them of the bigger prize (that family vacation), and tell them their choices here and now are, say, a picnic or a movie rental. Offer options, but don't give in to their push for more consumer goods.
9. Enlist other people. Many people are reticent to talk about money worries, but almost everyone has them, so open up and tap your allies. Hold a contest with friends to see who can save the most in a month, or agree with your spouse to talk before spending more than $100, Mr. Buffone suggests.
10. Post it. Remind yourself by putting post-it notes on your wallet, mirror or steering wheel with the mantra of your choosing: "I want to go to Hawaii in January." "I want to pay off credit-card debt."
11. Automate it. Divert money monthly from your checking account to savings. It will force you to budget, based on what's left in your checking account.
12. Rethink rewards. What are some of your happiest memories? Those are the true rewards. Next time you're about to buy something because you deserve it, ask yourself whether there isn't something you deserve more, such as time at home cooking with your teenager, or a stroll with your husband or best friend.
"We've been conditioned to think that spending the money on clothes, at a restaurant, is going to be the reward," Ms. Gurney says. "But what is the ultimate reward that we want from working hard, in the end?"
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