Why aren’t we saving? It’s because we have cultivated a ‘wanting’ mindset.
We WANT all the latest brands. We WANT to be seen at the trendiest hangouts. We WANT to drive the best car. We WANT to have the latest technology, etc. But why?
As humans, we are wired for pleasure. We want to feel good and we want to avoid pain or suffering. This feeling drives our behaviour to satisfy or fulfil our needs, especially our basic needs to eat, breathe and sleep.
The problem is that nowadays, that feeling has evolved so much that people see the latest version of their phone as an absolute necessity! And the quicker we satisfy that need the better; because our brains then release a hormone called dopamine: our basic feel-good hormone. It’s like a drug and you feel so happy every time you spend money on something nice for yourself, that you don’t really stop until the wheels fall off.
This need for instant gratification is aggravated by social media and the internet.
We can watch the latest movie releases and up-to-date episodes of our favourite series, without having to wait a week for the next one to air. We even can order our favourite items of clothing, make-up and gadgets online, and it will be delivered within 24 hours.
Another factor is that it has become too easy to make debt. Even if you’ve been ‘blacklisted’, some companies will still give you a loan. So now, on top of the instant gratification and wanting mindset, we are bombarded with marketing messages that all of this is possible with a personal loan or store card. And they will make it very attractive, often offering a R500 or more discount if you open an account and spend a certain amount of money. This means that you are immediately indebted to them – while getting your shot of feel-good dopamine.
We need to have a saving mindset
Our financial mindset is weighted very heavily towards spending and having more. The result is a life without balance and a lack of education about saving.
If you want to start saving, you will have to change your mindset from a ‘wanting’ mindset to a ‘saving’ mindset. This will only happen if you make the decision to start saving, then dedicate your actions towards this cause. You might have to make some lifestyle changes, but if you are dedicated to saving, the changes won’t be so difficult.
We recommend you write down WHY you are saving, or WHAT you are saving for. Or better yet, find some pictures of what you want to achieve with the money you save and paste it on your wall or behind the kettle, where you can see it every day. It will remind you of what you are working towards.
Train your mind to become excited at the prospect of having cashflow, rather than being cash strapped. It is very important to know why you are saving, otherwise you will not be motivated to do it. Why = Motivation.
How to start saving
To start saving, you will have to assess your current financial situation. Stop making debt. Look at where you are wasting money. See where you can cut costs.
Classic examples are:
- When you go grocery shopping, do you have a shopping list and are you sticking to it? Are there many impulse buys in your trolley every time? Those chocolate bars and other snacks can add up to a lot of money each month.
- When buying something, do you assess whether it’s a want or a need? If it’s a want, you can probably live without it, so don’t buy it.
- When going to the mall, do you buy a smoothie or ice cream every time? If so, eat before you go to the mall!
- Look at your banking fees. How much does it cost you to draw cash every time? Cash withdrawal fees can add up to a lot. So, read up on your banking fee structure, and only draw cash where it’s cheapest or free, and limit your cash withdrawals. The same goes for swiping your card. Always go for the cheaper option and make sure that you know what your bank charges are.
- Do you have a budget and do you stick to it? Sticking to your budget is very important if you want to become financially successful, and it will help you develop the right financial mindset.
- How many nights do you get take-out or convenience foods? Convenience foods are very expensive. Rather make your own.
Once you’ve cut down on your spending and cut out all the unnecessary expenses, revisit your budget and decide on how much you want to save every month.
Tip: Don’t let savings take the lowest position on your budget. Make it the first thing you do! Open a savings account and put your savings away first. If possible, remove the temptation of not paying some months by automating your payments from your bank account. Pay everything else after that – and then forget about your savings.
Make saving money a family effort
Saving is so much easier when the whole family is doing it. So, teach your children to save too. A good tip is to get them three jars and mark them as: Save, Spend, Donate. Have them decide how to split up their pocket money into the three jars. This teaches children good financial habits from a young age.
We know that this will not be easy at first. That’s because you are still training your mind and learning new behaviours. This doesn’t happen overnight. Be easy on yourself. Just follow these steps as diligently as possible, and consciously live by a savings mindset to watch your savings grow.
If you are struggling and over-indebted, contact NDA for help. We can help you draw up a budget, lower your monthly debt repayments and show you where you can save money. Just fill out the form on the right-hand side for a free assessment.