Welcome to Week 2 of $1000 Money Saving Challenge!
I’m so glad you completed week 1 of this 12-week money-saving challenge. You have tucked away at least $65 in your savings in last week. It’s a very good start.
Now, let’s continue our mission with Week 2. This week, our objective is to start building a money-saving habit without any struggle.
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Table of Contents
Quick Win Action for Week 2-
This week’s Saving Goal: $80
This week’s Saving Balance: $145
- By now, you may have set up automatic savings for next 12 weeks. In that case, ignore step 2 and 3. Just continue seeing your balance grow every single week.
- If you did not set up automatic saving, no worries. Today is a great day to do that. Refer to the handy dandy 12 weeks saving chart below. It will take a few minutes now, but will save you this exercise for next 10 weeks.
3. If you do not want the automatic savings, for any reason, just manually save $80 either in cash or in your online savings account dedicated for this challenge. Tick mark the space next to week 2 on your printable. You are done for this week.
4.Tick mark the space next to week 1 on your printable. You are done for the week
You must have also received additional money saving tips in the email if you joined this challenge.
For now, let us explore the main topic of this week.
Develop Good Money Saving Habits
Last week, you got to know your income and expenses for a typical month. If you want to continue tracking your expenses, use this simple income and expense tracker.
Habits such as tracking your expenses, automating your savings and creating a budget are the basic money-saving habits. Everyone of us should follow them to maintain balance in our financial lives. As simple and basic as they sound, they are harder to follow consistently. Our lives gets busy, our responsibilities increase, and somewhere in the chaos of life and work, these basic money-saving habits take a vacation. Skipping them once in a while is OK as long as you get back on track soon.
What are 3 types of spending?
Do you know there are 3 types of spending?
- Fixed spending- essential for our survival. they are our TRUE NEEDS
- Variable spending- for things that crop up every now and then. They are generally our wants
- Impulse spending- for things we never really wanted or needed but shop anyway due to peer pressure or others’ lifestyle influences.
This week, we will focus on the reducing the impulse spending.
First two are essential for our survival. We have certain fixed expenses for living, food, transportation, clothing, education and medical. No matter how much we try to control these expenses, there is a limit. Thanks to something called Inflation. Variable expenses are for things that crop up every now and then. Going out for dinner, gifts, parties, books, latest gadgets, upgrades etc. Not all of these variable spending is bad. But if it is not managed well, it can get out of control pretty fast.
The worst of these 3 is impulse spending. It did not exist up until the 1950s, even until the 1970s. After WW 2, industrialization and modernization has introduced it to us with the concept of disposable income. If our forefathers are listening to us, they will wonder why they heck would anyone dispose of their income? Strange but it’s true for most developed and developing countries, where credit is available freely.
We spend too much on things that most often do not add any particular value in our lives. When those things do not help us, we go out and get better, more expensive options for the things that we never needed in the first place. When we do that, we forget to throw out old things and now we get surrounded by old, new things and the worst of all the debt that we accumulated in hoarding things.
What are good Money Saving Habits?
Money saving habits helps you take charge of your expenses. Not many of us can increase our income substantially to match our expenses. Some of us rely on credit to take care of some variable expenses. It gets out of hand quickly if continue bad habits of spending our hard-earned income.
- Get to know your numbers well. Always track your income and expenses- Last week, you got to know your income and expenses for a typical month. If you want to continue tracking your expenses, use this simple income and expense tracker;
- Increase the gap between income and expenses. More the gap, better the chances for investing your money wisely and earn interest out of it;
- Automate your savings and essential monthly bills. This way you never forget paying your bills on time and pay additional late payment fees;
- Create basic budget and stick with it.
These are basic money-saving habits. Everyone of us should follow them to maintain balance in our financial lives. As simple and basic as they sound, they are harder to follow consistently. Our lives gets busy, our responsibilities increase, and somewhere in the chaos of life and work, these basic money-saving habits take a vacation. Skipping them once in a while is OK as long as you get back on track soon.
For more money saving habits, check this article- 40 money saving habits that will help you retire early and gain financial freedom
How do I stop my spending habits?
- Know what triggers you to spend the money. Is it a bargain deal? Is it a shiny object? A new fashion trend? A new upgrade to your phone or other gadgets?
- If it’s a bargain deal, pause your sales and promotion email and texts. Best is to unsubscribe from them. Like last week, practice postponing any planned purchases this week again. Continue adding things you would like to buy in the wish-list. Don’t forget to write down the price of this item. Don’t worry about that coupon offer or sale notification in your email or phone. It will still be there a couple of weeks down the line. If not, you will get the best deal during thanksgiving or Black Friday sale.
- You can also create a separate email folder for promotions. That way all sales related email will go directly in this folder. Now check this folder only during the last week of this challenge. These sales and promotions emails will not clutter your inbox and grab your attention to spend money on unnecessary things. You will not receive them in your inbox. It will get easier to save money as we progress further when sale notifications do not try to grab your attention.
- If credit card spending is out of control, switch to using the cash for 90 days for all your essential needs. Since many service providers offer automatic payments, you need to only manage your variable expenses with cash. Try Dave Ramsey’s cash envelope system. Dedicate a definite amount for your most common and basic spending categories. Use the cash in that envelop only for purchases of necessary items in that category. Once it’s gone, no more spending in that category. Therefore planning is very crucial for the cash envelope system to work.
Congratulations you just saved additional money by practicing delayed gratification. Your wallet or bank account is happy!
What are the bad money habits?
Financially wise people never make common mistakes that 70% of us do.
- They never spend their money without creating a budget first;
- They never wait to start saving and investing. Almost all financially wise people follow at least 50-30-20 money rule, in that they never let their living expenses go above 50% of their income, they always save at least 20% of their income and they keep their wants to only 30% of their income;
- They never forget to track their expense;
- They never pay their bill late;
- They never borrow more than they can afford;
- They never pay the full price or retail price for things that they need and want;
- They do not rely on credit but they use their credit wisely;
If you are willing to wait a few weeks or months for this item, it is clearly your want/ a desire. It’s not urgent and definitely not essential. But if it’s something important for you or your work, note it down in the needs vs wants tracker. Don’t forget to add the value of the item or a service. In the meantime, try to find something else that if repurposed or reused, may serve your purpose.
Why do these money-saving habits work?
These money saving habits helps you take charge of your expenses. Not many of us can increase our income substantially to match our expenses. Some of us rely on credit to take care of some variable expenses. It gets out of hand quickly if continue bad habits of spending our hard-earned income. When we practice at least a handful of these money-saving habits, we do not feel deprived of anything. We tend to practice contentment. We start taking care of our possessions and value our time. We learn to use our time and our resources wisely to build more sustainable income.
When you start practicing good-money saving habits at early age, it becomes a second nature. You life goals get easier to achieve becasue you have realistic goals for your life. These habits eventually help you achieve financial freedom.
Share your wins!
I added this week 2 checklist and a few additional tips on the blog, Pinterest as well as Facebook Page . Like the post, and share what is one thing you noticed you can live without this week? Could you postpone any non-essential purchases this week? How does that make you feel? We all are finding new ways to save and earn our money and time back back during pandemic. Share and cheer each other on so that by the end of this you will have made the necessary changes with our collective support.
Well, that’s it for today.
Next Sunday, you will receive the next lesson in the email. It will teach you all about making your kitchen your best asset to build long term financial freedom. Stay tuned!
Until then, if you have any questions, feel free to hit reply under this post- I’d love to hear your feedback!
Also, please SHARE the challenge with your friends who you think might need this. No shame in this money game!
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