Five smart ways to boost your savings (without living a boring life)

Self denial never lasts and isn't even the best approach to fast-tracking your savings. Here are five tips for cultivating an effective saver's mindset. By Frances Cook

Most money advice starts with what to cut. Cancel the Netflix. Skip the flat white. Eat beans.

But real saving, the kind that lasts, starts somewhere else. The details of what to save money on will change from person to person, but all of us can create a system that’s grounded in money psychology, in order to help us stick with it without hating life.

From tracking where your money really goes, to building buffers that buy peace of mind, these five experts share how to make saving work in the real world, without turning life into a spreadsheet.

Before you cut lattes or swear off takeaways, look your spending straight in the eye.

Chartered accountant and tax debt coach Nick Alcock says the real savings start with visibility. “I don't see many people actually keeping track of how much, they're spending money on on a month-by-month basis. They just look at their bank statements,” he said.

“They don't actually work out what they spend money on and why. I think that's one pretty key thing to do.”

The fix is simple but powerful: total it.

Pour yourself a glass of wine, or snap off a row of chocolate, and sit down with one month of your bank transactions.

Group them (housing, transport, food, subscriptions, ‘misc’), so that you can see where your biggest spending areas are.

No need for judgement, you’re just seeing what’s going where, and if that’s what you want to be happening. Alcock’s point is that once you can see the pattern, the next steps are obvious and far less painful.

If facing the numbers makes you want to hide, start tiny. He says the best way is to move through change one step at a time. File one overdue thing, cancel one unused thing, negotiate a better price for one bill.

Pick one thing a week, and you’ll be on a better track in no time.

The first step is visibility. Once you can see more clearly, you can start saving smarter.

Ruth Henderson, better known as The Happy Saver from her blog and podcast, says the real reason to save money isn’t about hoarding cash or ticking off a retirement target. It’s about freedom.

“All good money management does is give you options,” she said.

“I've led quite an interesting life and if something occurs to me that I want to go and do that, then off I go. So get back to me in five years and hopefully I've been doing more interesting things.

“I just wanted freedom, to use my time in whatever way I felt like using it.”

For Henderson, that flexibility has been years in the making. She and her husband worked to pay off the mortgage early, then switched to putting every extra dollar into sharemarket investments.

Now the couple is work optional, and stays that way by making sure every dollar has a purpose. The budget is tight, but doesn’t feel that way, because they know it gives them back freedom over their time.

Henderson looks at what they’ve spent in previous years, divides it over 52 weeks, and automates that money going into different bank accounts.

She uses a sinking funds system, a separate savings account you contribute to regularly for specific future costs, so the money’s waiting when you need it instead of hitting your emergency fund or credit card.

They accounts are all named, such as accounts for health, or car repairs, or schooling. It keeps the system calmer, and more predictable.

Vanessa Williams from Realestate.co.nz often talks to people who are exhausted by how hard the property hunt feels. But there are savings to be found in these big purchases, if you put the research behind it.

She points out that many of us go to work for an hourly rate, yet neglect the research on a big purchase that could save us far more than our job earns.

“Searching for a house is like having a second job,” she said.

“The amount of money that you are spending… you really want to spend that time, do the data, do the research.”

Williams sets up saved searches, tracks listings, and even keeps a spreadsheet of prices and sale dates to understand what’s really happening in each suburb.

That mindset can be applied to any big purchase you’re considering, whether it’s a car, or whiteware.

It’s not about being a “spreadsheet nerd,” as she puts it, it’s about giving yourself information power.

“Setting up a few saved searches is an hour or two… and the return on that could be tens of thousands, hundreds of thousands.”

Katie Wesney, head strategic coach at EnableMe, says most people go wrong when they forget what their money is for.

“You’ve got to think, what is our best version of a life, and how are we going to fund that, practically speaking?”

The trick isn’t cutting out everything fun, it’s linking your budget to what truly matters, and that will be different for all of us.

Some of us will want the opportunity to stay home with the kids. Others will want to invest aggressively. It doesn’t matter which yours is, just that you know what you’re after.

That means deciding what you value most, and being realistic about trade-offs.

“You can have options, but you can’t have everything,” she said. “So what are the things that we want more, and what are we willing to compromise on?”

Will White from Heartland Bank says the simplest form of financial security is still the best, especially in a rocky economy.

“You probably need a couple of months’ worth of your salary in reserve for a rainy-day fund,” he said.

“Only you will know your personal circumstances, your expenses, your commitments… but it makes sense to have that in reserve for at least a couple of months.”

A savings buffer can be what stops a bad week from becoming a financial crisis. If you lose your job or get hit with a big bill, cash on hand keeps you from racking up high-interest debt.

The trick, White said, is to remove temptation. “Keep your savings, your rainy-day savings, at a different bank to the bank that you have your everyday relationship with.

“If you can’t see it, you’re more likely to forget about it and let it sit there and compound rather than spending it.”

Even if you can only spare $10 a week to build up that buffer, White points out that’s still more progress than saving nothing at all.

The information in this article is general in nature and should not be read as personalised financial advice.