Think You’re Saving Money? Not Really

updated May 3, 2019
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Debt-slaying and money-saving posts are rife with suggestions for how to shave a little here, trim a little there, not spend, not spend, not spend. But you can’t say you’re saving money just because you’re packing your own lunch and drinking the coffee you brewed at home. If you don’t make a concerted effort to actually save that money — to tell it where to go and what to do — all your few-dollar deprivations will get frittered away elsewhere and you’ll keep spinning your financial wheels. That is to say: There’s a difference (to your bottom line) between not spending money and truly saving it.

Here are some ways to take the driver’s seat and watch your here-a-little, there-a-little, squirreled-away money accumulate into savings you can write home about.

The most fundamental part of truly saving money is adjusting how you look at money in the first place. Are you at the mercy of your income and your spending? No! You are The Boss of your money and you tell it what to do. This concept is at the heart of any successful budgeting system and why I frown on automated “budgeting” tools that give you a retrospective report of what you already spent.

Instead, take every dollar that comes into your possession and decide what it’s going to do. Will it be used to pay down your auto loan? Awesome. Does it need to go toward your electricity bill? Okay. Sometimes called a zero-based budget or, more stringently applied, the envelope system, this way of allocating the funds available to you will actually change your spending behavior. My personal favorite such budgeting tool is YNAB, recommended by many of you.

Back to the money you didn’t spend at Starbucks. Are your financial obligations budgeted for? Awesome! Into your millennial-pink-Chesterfield-sofa savings fund it goes. Put those fivers to work in budget categories you’ve purposefully defined and watch them grow.

Budgeting in this way will also help force you to cut back in areas you are choosing to slim down. If you only fill your dining out category with fifty dollars, you’ll think twice before picking up a bagel twice a week in the morning.

In addition to budgeting, there are other creative ways to contribute to your savings. Speaking of squirrels, Acorns lets you invest your spare change by rounding up your purchases to the nearest dollar and putting that money into an investment account. Or check out Unsplurge, which brings savings goals into the social arena. Who couldn’t use a little cheering on?

A combination of keeping track of what you’re not spending and adding this money to categories that you’ve purposely designated in a sound budgeting system will hoist that not spending (good for you! keep it up!) into the realm of honest-to-goodness saving.