• Bemi

How To Cultivate A Money Saving HABIT

Updated: Dec 10, 2020

You understand the importance of saving money and have read articles like ‘100 ways to save money in 2021’ but you still struggle to save. Why is it so hard? Read on to see if this blog post helps your thinking.


Why Save?

Read any personal finance book or blog and saving money is likely to come up as one of the top recommendations. £1 saved is more valuable than £1 earned. What do I mean by that? Well, the earned £1 first needs to be taxed and then has to do some matrix movie style dodging of our urge/need to spend before becoming a saved £1. Once saved, £1 in the right hands then becomes a seed that grows into a tree, which generates lots of £1 coins.

It makes sense right? The more money you save, the more you can put to work for you.


A robot would do this so well: simply program the robot’s spending once and that’s it. A robot’s program will kick in anytime a spending decision needs to be made. You and I on the other hand would probably find it really challenging and exhausting to keep weighing up our spending decisions daily, weekly or monthly. But is it at all possible that like anything else, the more we do it, the better it becomes? – till it becomes a HABIT and the effort required each time diminishes significantly.


Make a CONSCIOUS decision to learn to save money and Tell your brain it is IMPORTANT

No one is automatically good at saving money so don’t beat yourself up if this doesn’t come naturally to you. I believe that saving money is a learned skill: some are taught by their parents/culture and some are taught by life. This learning is sometimes conscious but more often it is unconscious. The good news is that anyone can learn to develop a money saving habit if you treat it like any other skill that you consciously learn. Think about the first time you drove a car or rode a bike. It required quite a bit of consistent practice before you became good at it. Now the car/bike is almost an extension of your body. You don’t give the act of driving/riding much thought. It just happens – kind of like how your legs just move when you’re walking.


The human brain is amazing. Once you tell it something is IMPORTANT, it begins to work on it even when you’re not actively thinking about it. Have you bought a car and then suddenly started noticing the brand of car everywhere? Have you turned an important idea or decision over in your head again and again with no resolution and then slept, then woke up and had amazing clarity? Convince your brain that saving money is important and you’ll find it randomly bringing ideas to your consciousness.


I had initially planned on writing a blog post like ‘25 ways of saving money in 2021’ but then I decided to google ‘ways of saving money’ and I found so many good articles on the subject. I was about to move on to write a different article and then I thought to myself: why do some of the people I talk to still struggle to put this wealth of information into action? I think part of the problem is the relative IMPORTANCE of the subject in their minds coupled with not CONSCIOUSLY deciding to learn to save money.


My biggest learning came from a difficult time in my late teens and early 20s going from being in a young homeless persons unit to being rehoused in a council flat. Here is a day I remember like yesterday:


I really messed up this time. I had just completed an odd job in Central London and needed to get home but didn’t have a penny. My next pay-check doesn’t arrive for a few days and I’m hungry. What do I do? I hop on a London Routemaster bus and beg the bus conductor. Thankfully, he obliges and I get home to my dingy council flat with just a cut up piece of foam for a bed. Won’t be long before I get a proper mattress. My next pay-check should cover it. I’m going to have to get better at making my money go further as this situation is not ideal.

This difficult period taught me the IMPORTANCE of saving money and made me CONSCIOUSLY learn to save money. This was pre-widespread online services such as YouTube and so most of the learning came from observations and from work colleagues, friends and family. I took the bus everywhere and would not take the train/tube even when I had the money. I once bought a reversible jacket because I could get two looks for one … lol. I timed the market and would buy fruit just before they closed as it was often much cheaper. I cooked my meals and tried not to eat out. If I did eat out for lunch, it’ll be a £1 chips from the local fish and chips shop. I recall going for lunch with my friend and she wanted to go to McDonalds, which might as well have been like going to a semi-posh restaurant in my mind – in terms of the cost. So, I pretended that I wasn’t hungry and sat with her while she ate. Then later went to the local fish and chips shop and bought just chips for £1.


My ears and eyes were tuned into any advice about saving money and I was prepared to act instantly. I didn’t buy a car even when I could afford it. I’d sooner take a girl out on a date to a Chinese restaurant that I’d already checked out before hand, to make sure there were no expensive surprises on the menu than just pick any restaurant at random. Free entry into a club before 11pm and I’m there by 10.30pm – then either get free tap water or buy one drink and sip slow…….as Kanye West said in one of his songs. No point trying to impress anyone as I’d be the only one eating garri (cheap and long-lasting granulated cassava) for a month if I’m not careful with my finances. Most importantly, I learnt to be comfortable with myself and not try to keep up with the Joneses. The more I practiced the ART of money saving, the easier it became. Delayed gratification became easier and easier. Having had a taste of how bad things could get, I had a very LOUD voice in my head that helped me to weigh up even the smallest of spending decisions.


I saved most of my student loan over 4 years and then used that as a deposit to buy my first property whilst in the final year of my pharmacy degree. But I don’t want to paint the wrong picture. Being frugal didn’t mean that I looked or sounded poor. I did most things that other students did and went on at least one holiday a year. You have to understand that I was just happy to be living independently and I strongly believed that my future was bright so long as I kept working hard at my studies.


Let’s have a look at 5 things that could help you to develop a money savings habit


1. Attach your Saving to a Goal and Track it

You probably already know that if you want to achieve something, you would first need to dream about it and perhaps yearn for it. This then pushes you into action. This rings true for saving money but saying to yourself that you want to save more money is not particularly helpful because it is not that exciting. What is more powerful is when you attach that savings to a goal. For example, I’m saving to buy a house; I’m saving to have a 6-month break; I’m saving to pay off my mortgage; I’m saving to be financially independent. Earlier, I mentioned that I’d saved most of my student loan over 4 years. This wasn’t by accident: within a month of being rehoused in a council flat, I’d set a GOAL of buying either the council flat or another property.


Tracking your savings helps to monitor your progress. Saving £5 here and there may not seem like a lot, but if at the end of a month, quarter or year, you were to tally it up and see that you’ve saved say £500… you might be motivated to continue. Please also remember to CELEBRATE your achievements. Give yourself a pat on the back whenever you meet a savings milestone.


2. Reflect on the difference between Your NEEDS and Your WANTS and Try to understand what REALLY makes you happy

My observations/experience of both the extravagant affluence of Nigeria (my ancestral home) and the contrasting stark poverty has shaped my perceptions of the difference between NEEDS and WANTS. Needs for me include 2 full meals a day, a sanitary accommodation with conditions for a good nights’ sleep, earning an income from a job, warm clothes e.tc. Wants include a car, a TV, entertainment, holidays e.tc.


I’d encourage you to reflect on YOUR wants and needs as this makes it easier to weigh spending decisions. Starting with the big-ticket items like your mortgage or rent. For example, do you really NEED to live where you live? Could you live somewhere cheaper and still have the same quality of life? Knowing that the savings could be what you need to train and change to a new higher paying/more fulfilling career. Do you really NEED that car? Or if you need a car, does it have to be that brand?


One simple thought that has helped me over the years goes like this:

Bemi, you can have one thing you’ve always WANTED, but you can’t have all your wants at the same time and still expect to save anything significant relative to your earnings.

The implication being that I try to prioritise what gives me the most pleasure and decide what I can do without. As you begin to hit your savings goals and as your financial situation begins to improve, you may then find that the wants you had before cost less and less relative to your net income. The challenge then becomes trying not to develop a taste for too many additional expensive wants just because your financial situation has improved.


What REALLY makes you happy? Here is a thought experiment to help you reflect on this: The £100 Billion Thought Experiment that Could Change your Life


3. Habitually consider the REAL cost of Things

I coveted the Nike Air Max trainers, which we all called 110s because they cost £110. I’m not talking about £110 in today’s (2020) money, but £110 back in the early noughties. I gave in to my desires after saving and saving. Then, weeks later I had serious buyers’ remorse. I was earning about £6 an hour, which meant the 110s cost me over 18 hours of hard work – possibly as much as 25 hours when you consider that the earned £6 an hour was before tax. This was a learning that has stuck with me to date. It was like a light bulb moment in my head, after which I started costing things in terms of my time and effort.


How much is that phone? …£600? Nope, that phone costs over 60 hours of ‘hard’ labour if I earn £10 an hour in a job I hate. It costs me over 24 hours in an OK..ish job if I earn £25 an hour as a pharmacist. Now think about those hours at work and decide if whatever you are trying to buy is worth it. If we want to take this further, we could include the opportunity cost of that £600. In addition to the hours at work that it cost me, I’m also losing out on the potential gain over say 10 years If I’d invested the money.


4. Join a community of like-minded people

It’s really hard to go on the journey of saving on your own. It’s harder still if your immediate network that you spend most of your time with love to spend money. There are many online groups out there and it shouldn’t be too difficult to find one by googling. For example you could join the FIRE (Financial Independence Retire Early) movement on any one of the social media platforms. Perhaps you could rally a small group of TRUSTED friends, share your thoughts and goals with each other and motivate each other to keep going. Talking about your savings goals with trusted friends and writing it down makes it more real and is a way of making yourself accountable.


5. Automate as much as possible

Remember that you are not a robot. Your day to day emotions will mean that some days/weeks/months will be harder than others. Thankfully, there’s a way of robotising your decisions and this is called automation. After you’ve reflected on your goals and worked out a savings target, it’s a good idea to automate as much as possible. For example, setting an amount to leave your main account into a separate savings account a day or two after your salary is normally paid into your account.


Automation also includes leveraging free advice, apps and tools and getting information to come to you. Here are some examples:

  • Subscribe to the money savings expert https://www.moneysavingexpert.com/ newsletter

  • Subscribe to one or two podcasts on saving and investing and listen to them while commuting to work, in the gym, doing dishes e.tc I enjoy listening to the meaningful money podcast https://meaningfulmoney.tv/mmpodcast/

  • Download an automatic savings app such as Chip https://getchip.uk/ or Moneybox https://www.moneyboxapp.com/ These are just two examples; there are many others.

  • Sign up to the money savings expert cheap energy club to get automatic reminders and support when your gas/electricity contract is up for renewal https://clubs.moneysavingexpert.com/cheapenergyclub

  • Use your email account to set up annual reminders that pop-up a month before: the fixed rate on your mortgage ends; your rent contract is up for renewal; your phone contract is up for renewal e.tc

That’s it for this post. I wish you all the best on your money savings journey.


Bemi