A Small Change to Help Maximize Your Savings
How I saved more than half my salary each month
Savings can be extremely difficult.
When we start earning, we entitle ourselves to our deepest underlying cravings. And why not? Don’t we all deserve a treat after working so hard in the first place?
The answer is simply, yes.
We all deserve a reward. It’s the best way to stay healthy mentally and emotionally.
Then why save money in the first place?
Life is uncertain. As Yoshida Kenko quotes,
Life’s most precious gift is, uncertainty.
Yeah, we all know that.
While we were at the peak of our comforts, some guy at some random place you never even knew about ate a bat and look at us.
Some incident isn’t going to announce itself.
According to a report by Congressional Research Service, 6.71% of people have been unemployed due to coronavirus in the UK.
We can never predict the future, but having money in the bank provides you the necessary means in times of crisis.
There is no limit to the crisis that can happen in the future. Similar to coronavirus, nobody can predict a crisis like “The Great Depression,” natural disasters, World War I and II.
History is living proof that you can never predict anything successfully. The only thing we can do is prepare today. Savings can give you a much-needed edge.
In the book, The Richest Man in Babylon, the author quotes:
“One-tenth of what you earn should be yours to keep. If you are doing that, then by the end of the tenth moon (month), you are paying yourself an extra month of wage.”
This principle has been applicable for centuries and millennials and will continue to apply for as long as time.
With savings, you will feel much freer, having more control over your life and decisions.
What did I use to do?
Like every new student turned employee, I started spending money. Now I earned my own money. I could do anything with that unlimited supply of money (literally).
That's what I thought until I had to buy a laptop one day. That’s when I realized that I had no savings.
I had no problems with the things that were less costly, but when it came to big requirements, that's where the problems started.
I realized my habits were horrible when it came to money management.
I needed to change my spending habits.
We all have it in the back of our heads, yet we procrastinate, falling prey to every little temptation that crosses our path.
A famous experiment conducted at Stanford University concluded that people with one habit are most likely to succeed in life.
That habit is called Delayed Gratification.
Any habit can be learned and unlearned at any time. All it requires is one little push from our side.
So now, I had to start saving.
Well planned. Planning, setting a goal is halfway to completing the task right? Hell No. It was tougher to unlearn a behavior that gives so much pleasure.
Right motivations are only useful when we have a system in place to back that.
The first few months were tough. I’d save some money one month and be broke by the next month.
What did I start doing?
I tried to apply Kakeibo in my life.
(Book: Kakeibo: The Japanese Art of Saving Money by Fumiko Chiba)
Kakeibo is a century-old budgeting technique from Japan. Simply put, Kakeibo is the act of journaling, to track your expenses. You categorize your income, your expenses, your expected saving goals and try sticking to that.
After some months, I noticed that I had just been filling pages with useless information like what I ate, what I drank.
I was getting nowhere.
Yet, I forcibly saved some money, partly because my country was under lockdown.
Once the lockdown was lifted, I was back to spending money on random things and trying to justify why I made a good choice, when it was definitely a bad one.
Kakeibo is a great approach.
It was because of having too much useless information that my notebook was cluttered. The clutter was discouragingly messy.
I thought I would clean up the mess. This is the month, I thought of a new approach. Now I’d only track the money I took out of my ATM.
If I took 5000 Rupees (roughly 50 dollars), I’d just note that down. Not how I spent it.
Now, my mind was free. I only had to reduce the number of times I took the money out. With 5000 that I took out, I went for a couple of weeks. I didn’t have any load of noting down every little detail.
The next month, I thought I’d reduce the number of times I took the money out of the ATM.
I gave myself a challenge. How about I try using only the money I took out for as long as I could.
To my surprise, it worked. I only needed a quarter of the money that I earned. I could just save the rest of it. It has been 3 months now that I have been continuing it.
I am much satisfied with having spare cash in the bank. I will now be buying the laptop I ever so wanted in a couple of months.
I had the satisfaction of saving money and minimizing my spendings by much more than I ever imagined.
Conclusion
Easy Right!
Remember: What’s easier to do is also what’s most easier to neglect.
Below is a comparison of my financial journals.
Delayed gratification may be something you are born with. But, it can be trained.
Having good money habits is what matters.
