Investor Central

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Tuesday, October 21, 2014

5 Ways to Trigger Your Money-Saving Reflex

If you have trouble balancing your wants vs. your needs when it comes to spending, the LVRJ has some tips on how to prioritize your long-term savings goals over your short-term expenses.

5 Ways to Empower Your Savings Habits:

  1. Create a Paper Chain to Manage Debt or Grow Savings
    • Get Rich Slowly published an article by a woman who created a paper chain to tackle her debt. Each ring represented $100 she owed. As she worked to pay down expenses, she would tear apart the chain and watch it grow smaller. This physical representation made her progress more noticeable, effectively increasing her satisfaction and motivating her to diminish her debt. This same tactic can be used for saving money, as well (by adding rather than removing rings on the chain).
  2. Build a Vision Board
    • Pinterest is a popular social media tool for building inspiration and idea boards. If you’re an active user of this site, building a vision board for your financial goals can be a wise motivator when it comes to saving money. If you don’t use Pinterest regularly, you can also place a physical poster board in your bedroom or office to keep you motivated on a daily basis.
  3. Write Your Goals on Your Credit Card or Wallet
    • There’s no better way to remind yourself of your savings goals then to put them right in your hand at the moment you need to think of them most. Say you’re still $850 away from your goal of saving $1,000: Write down that number on a post-it and wrap it around your card. The next time you’re tempted to buy something you don’t need, you’ll see your goal written out and can subtract from that amount whatever you decide not to buy.
  4. Pay Yourself Every Time You Decide to Save
    • Whenever you make good on your promise to save, divide the amount saved to pay yourself a bit for following through. Saving money shouldn’t necessitate denying yourself — that’s just a recipe for disaster later on. Rather than completely withholding from immediate expenses, you could also take the $50 you decided to save on shoes, credit $40 to your account and give yourself $10 to spend however you choose. It might take a bit longer to reach your savings goal, but this strategy will help keep you satisfied in the process.
  5. Opt for Another Low-Cost Option
    • In the same vein, saving money shouldn’t be associated with the pain of denying yourself some fun and enjoyment. If you decide to not buy those expensive concert tickets, go to a free or cheaper show instead. Don’t completely hold out on the things you enjoy. Choose a low-cost alternative to the expense you avoided to prevent resentfulness and to help maintain your resolve to save.

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