How changing the way you think can boost your bank balance

The other day, I was chatting with a woman who had turned her financial life around. She went from years of constant financial stress, to sustainably building her savings to over $20,000 in just over a year.

This wasn’t the first time I’d seen this kind of a financial turnaround.

letchCredit: Simon Letch

Yet, when you’re struggling to save, stuck going one step forward two steps back on a savings rollercoaster, this kind of turnaround can sound frustratingly far-fetched.

It’s easy to feel like this requires some stroke of luck: a big bonus, a significant pay increase, an unusually large tax refund, or some gift or inheritance to move things along.

Sure, those things can help. But people who save big also have a fundamentally different mindset towards money than those who struggle to save. Here’s what that looks like.

Clarity on what matters – and what doesn’t

This is one of the significant differences I see between people who save consistently with ease, and those who don’t. The former tend to – consciously or unconsciously – be more attuned and aligned with their own core values and priorities, and their spending behaviours reflect this.

Big savers tend to care more about the security that wealth can bring, than the things money can buy.

This means they are less driven by social pressure, less likely to engage in emotional spending, more likely to have healthy financial boundaries and the ability to say ‘no’ when a situation doesn’t align with their values.

This allows them to design and easily maintain a lifestyle that is compatible with saving consistently, instead of being locked in a continual tug of war between wanting to spend but feeling like they ‘should’ save instead.

Reflect on your core values and priorities, and compare this to your spending. How aligned is your spending with what you say your priorities and values are? If you say you value health and family, but all your spending is on clothes and restaurants, there’s an incongruence there.

Prioritising security and freedom over stuff

Big savers tend to care more about the security that wealth can bring, than the things money can buy. This means when they see their savings balance grow, they are not immediately tempted to spend it.

They don’t see thousands in their account and automatically think of all the things it can buy them. They aren’t mentally spending money as soon as it hits their account.

Instead, for big savers, the goal isn’t to accumulate money to spend it but, to a certain degree, the accumulation of the money is the goal in itself, not the spending of it.

So, in a way, they derive more satisfaction from growing their wealth, than from the things their wealth can buy. They care more about ‘being’ wealthy, than ‘looking’ wealthy.

Balancing the needs of future-self with present-self

To save money consistently, you have to care about your future because that’s essentially what you’re saving for. Big savers tend to have future goals they care about and find exciting or important.

Those goals can be specific – like a house, or holiday, or achieving a certain financial status – or more general, like wanting financial peace of mind and security. Either way, they care more about those future goals, than the immediate gratification of spending today.

This means when an opportunity to spend arises, on some level, either consciously or not, they are weighing up the importance of the opportunity today to their future goals and priorities. Is this expense or desire today, more important than this other thing I want in the future?

Having bigger financial goals

Big savers tend to have bigger financial goals which inherently requires more savings. Buying a car requires you to save up more than buying a new item of clothing. Buying a house requires you to save up more than buying a car. Bigger goals require a greater commitment to saving.

This is where traditional financial advice may do more harm than good. Often, mainstream advice encourages us to reduce our desire to spend. If you don’t want anything, then you won’t be tempted to spend.

But at the same time, if you don’t want anything, if you have no future goals that are exciting or compelling, it can be hard to find the motivation to save at all. It can start to feel like you’re working hard, doing all the right things, being responsible, all for ‘nothing’. What’s the point?

If you’ve had a fraught relationship with saving money, reflect on where you stand in relation to these mindsets. When you start thinking like a big saver, you will start acting like one too. Slowly, one decision after another, your spending and therefore saving habits will start to shift.

Paridhi Jain is the founder of SkilledSmart which helps adults learn to manage, save and invest their money through financial education courses and classes.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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