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Can’t Reach Your Savings Goal? Try These 5 Tactics

You’ve committed to keeping your budget below a certain amount of money every month. Your heart is in the right place. But no matter how hard you try, you feel like you just can’t reduce your spending down to your desired level.

Sound familiar? Don’t worry. This is a common problem — and it’s fixable. Here are a few tips that can help you stick to your budget and reach your savings goals.

#1: Focus on the “Big Three”

The majority of people find that their budgets are consumed by three major expenses: Housing, transportation and food. Focus on trimming back these three items, since they consume most of your budget.

Many people approach cost-cutting from the opposite direction: they look at areas in which they already don’t spend too much money, and try to trim those areas back further. If you’re already in the habit of only spending 1 percent of your take-home pay on movies, books and entertainment, trimming back from 1 percent to 0 percent won’t make a very large dent in your budget. But if you can move to a cheaper flat — reducing your housing costs from 35 percent to 25 percent of your total pay — then you’ll instantly make a huge stride.

#2: Save First

Many people spend as much money as they earn (or more), and then find themselves with nothing leftover to save at the end of the month. Try the opposite tactic: Save money first, each time you get paid. Put this in a savings account that’s highly inconvenient to access. Then force yourself to live on whatever money is leftover.

By saving first, you make your own savings goals the top priority in your financial life.

#3: Develop Cheap, Time-Consuming Hobbies

Many people spend money because they’re bored. This manifests in a variety of ways: drinking too much alcohol, dining at restaurants too often, recreational shopping.

Instead, develop one or two hobbies that will capture your time, energy and imagination. If you’re on a very tight budget, choose a cheap hobby like running, which doesn’t require much gear (just a good pair of shoes!), or reading books, which can be free if you use the library.

#4: Develop a Pay-in-Full Mindset

When you think about making a purchase, don’t think about whether or not you can afford the monthly payments. Instead, think about whether or not you can buy the entire item, paid-in-full, with cash. This holds true for almost anything that you purchase: furniture, cars, jewelry. (The exception, of course, is your home.)

Thinking about buying in cash, rather than through debt or credit, fundamentally shifts your notions of what you should and shouldn’t purchase.

#5: Pay in Cash

Try this as an experiment: Make purchases by paying with actual, physical cash, rather than swiping a credit card or a debit card. Try this for one month and see whether or not it changes your spending behavior.

What’s the idea behind this experiment? Some financial experts believe that we’re distanced from money when we swipe a plastic card. If we hand over cold, physical cash, we “feel” the fact that we’re spending money — and therefore we’ll think carefully before we make any purchase.

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