How To Become A Frugal Money Saver

We all want to save more. After all, who wouldn’t want to be the best frugal money saver (and savviest investor) they possibly could? But the truth is that saving money is hard, and many — if not most — of us struggle with it. A recent survey from NerdWallet shows that less than half (45%) of Americans would be able to cover a $1,000 emergency expense without turning to a credit card or loan. In other words, we need to start saving more, ASAP. But what’s holding you back from being a frugal money saver? According to numbers from Bankrate, 63% of adults say that, in 2024, inflation is the main roadblock on the path to putting more money away. For others, it can be a simple case of not earning enough — and that’s especially true for those just starting in their careers (and earning very little) or people who have recently experienced a job loss (who are just trying to stay afloat). Other times though, there’s more to our inability to save than meets the eye. We might have mental blocks that we aren’t even aware of that are pushing us to spend, or holding us back from saving as much as we could. It’s time to remove these blocks once and for all, and break down the mental barriers we may be facing to becoming a frugal money saver.

TEMPORAL DISCOUNTING 

Whether it’s buying a new handbag or heading out for a fancy dinner, we’ve all experienced the temporary high that comes with splurging. It even has a fancy name: “temporal discounting.” This occurs when we prioritize spending on things or experiences that will provide us with satisfaction in the here-and-now, versus saving for a bigger goal in the future. Unfortunately, this is how we’re wired as human beings. The way the human brain is set up,”it’s really focused more on rewards that are immediate, more so than rewards that could happen in the future,” says financial therapist  Amanda Clayman. “We have a real preference for anything that’s going to kind of give us that reward feeling in the immediate term, versus the long term.” The trick to overcoming this instinct? Prioritizing “future you.” Yes, it’s hard — especially when we have so much that we want NOW (ahem, TikTok shop, we’re looking at you). But this is where our goals come into play. When we make saving for retirement, a house, or a car part of our daily lives, then we’re much more likely to succeed in actually achieving those goals. The next time you’re tempted by an impulse buy, take a 24-hour pause before you pull the trigger, and spend that time reflecting on all the bigger financial goals you want to accomplish this year. Chances are, you may realize you don’t really need that new thing after all.

NOT KNOWING YOUR “WHY”

Why do you want to become a frugal money saver? Why are you passionate about having more money in your bank account at the end of every month? If you don’t have an answer, this could be the very thing holding you back from saving more. “Many have no ‘why’ when it comes to saving,” says certified financial planner and money coach Jenny Whichello. “Saving is something they know they ‘should’ do, but without meaningful goals, they simply don’t take the steps to get started, or they never build and sustain momentum to see it through.” In other words, when your “why” isn’t front and center in your mind, it’s a lot easier to spend and not save for the future, whether that be for retirement, your child’s college education, a new home, or other long-term goals. The best way you can save more is by keeping your eyes on the prize. When you identify exactly what your prize is, the hardest part is over!

THE ISSUE OF COMPETING PROBLEMS 

How many times has this happened to you: You start out the month planning to save more money, but then.. the car needs a repair. Or a friend’s birthday dinner cost a little (or a lot) more than expected. Or you find yourself working fewer hours because your kid got sick. Far too often, we find ourselves just putting out the fire that’s burning the fastest without thinking things through. This is called going into “reactivity mode,” and it can be deadly for our bottom line, Clayman says. When we’re only able to take care of what’s immediately in front of us, we lose our ability to adapt to and respond to long-term challenges. While “life happens” and we always need to be able to solve the problems that are right in front of us, we also need to be able to plan ahead at the same time. One of the best ways we can do this is by saving a little at a time. Even in a month where we have financial problems to solve, we can still find space to set aside $20 into our savings account… Then, before we know it, a little emergency cushion will be there for us when we need it, and we can start putting more money aside for our bigger life goals.

YOUR MONEY BELIEFS, BOTH KNOWN AND UNKNOWN 

Whether we know it or not, we all have beliefs around our ability, as well as our  “worthiness” when it comes to saving money, Whichello says. For some people, “it could be that they’ve tried to save in the past, failed, and now they hold a core belief that they just can’t do it because they’re lacking in some way,” she says. For example, we may not feel we have the financial knowledge, skills, or commitment to be “good” at saving due to money beliefs that may have formed at a young age. This can be common amongst individuals who grew up in a household where the family lived paycheck-to-paycheck, or where money was scarce. “Their subconscious mind is programmed to believe saving and building wealth is for people who were born into affluent families and not them,” Whichello says. But this couldn’t be further from the truth. We are all writing our own story with money, every single day. No matter how money was treated in the home where we grew up, we have a chance to make our future one that’s successful and financially empowered.

HOW TO OVERCOME MENTAL BARRIERS AND BECOME A FRUGAL MONEY SAVER

While our mental blocks can stall our savings goals, there are always ways to overcome them. For most, breaking mental barriers to saving starts with being honest about where your money is going. “That’s the place from which we actually gain access to a lot more levers of being able to change and adjust our choices and change and adjust our behaviors,” says Clayman. “That really starts with just being cashflow aware.” In other words, we all need to gain a basic understanding of the money we have coming in, and the money we have going out. “Visioning” is another tactic experts suggest to prevent mental speed bumps from turning into full-blown roadblocks. This involves getting clarity about all your goals, and devising a real plan for getting there. In other words, we can’t just have a goal to “save more.” Instead, we should have a clear and defined goal to save $200 every month, to put towards the cost of that beautiful new car we’ve been eyeing. Having a vision for exactly what we want to achieve will help us reach our goals. We also need to pay attention to our “stress cues” that may inspire us to react too quickly when a financial emergency arises, Clayman says. Once we know our stress cues, we can take a step back, take a deep breath, and give ourselves time to respond appropriately without reacting from a place of panic. For many, overcoming the mental barriers to becoming a frugal money saver is a lifelong process. One of the most helpful tools in our kit, according to Clayman, is having a support system (like our family and friends!) and being more willing to talk openly about money and the way you handle it. “Our social taboos that we have around money take away one of our biggest resources that can help us be our best selves,” she says. It’s only when we can talk openly about money with people we trust that we really start to see a positive shift in our emotional lives with money.