How to Increase your Savings

A very wise man once said, “If you cannot save, the seeds of greatness are not in you”. I guess he is saying that if you have no discipline to spend less than you earn, you will not have the discipline to succeed in any other area of life. I have found this to be true. I have also found trying to save 10% of what I earn nigh on impossible…till now!

So, if you KNOW you are supposed to save at least 10% of what you earn, why don’t you actually do it? Have you ever said to yourself (I know I have) “When I earn more, I will start saving”? And when you do get a pay increase or an unexpected windfall, you end up simply increasing your expenditures. There is an explanation for this and it’s an economic phenomena called “Parkinson’s Law” where your costs rise to meet your income.

Two things you should know if you want to achieve financial freedom (the ability to maintain your lifestyle whether you choose to work or not) are to be able to save a minimum of 10% of what you earn and overcome Parkinson’s Law. How do you do this? Read on.

A short time ago I was blessed to receive some sage advice from a man who has made more millionaires than anyone else on the Planet. I would love to share with you that advice.

The reason it is so difficult to save is because of your psychological conditioning. You have equated saving with “Pain”. A loss of spending ability. And the double edged sword, you have equated spending with “Pleasure”. So whenever you spend your money, you get these little endorphin hits in your body chemistry and become addicted to the experience. And vice versa, you signal pain at the thought of saving (feeling of lack) and shy away, even though you consciously know you should save.

Now, Step 1 is to consciously reverse this pattern. Do your best to substitute pain for pleasure at the thought of saving, and substitute pleasure for pain at the thought of spending. It sounds simple and it is, however it is not easy. It takes practice and discipline but you can do it. In fact you MUST do it.

Step 2 is to…please don’t groan…set goals! You hear this from every “Self Help Guru” from Deepak Chopra to Anthony Robbins, but there is incredible power in this act. The mere writing down of a goal makes it 1000 times more likely you will achieve it. The mistake you make is that you’ll set your goals so unrealistically high that you get discouraged and quit if you cannot achieve them in a reasonable amount of time.

You need to build your “belief muscles” up, because like regular muscles, if you haven’t exercised them in a while, they atrophy. Small, easily achievable goals to begin with help you to increase your confidence, belief and self-esteem. You can start to increase your goals when you have “knocked over” a few easy ones and you have gathered some momentum. As you know, with confidence, belief and self-esteem, you can do just about anything.

So aim to save 1% of your weekly income. If you earn, say, a nett $600.00 per week that would equal $6.00. Not much and a bit discouraging, however this little discipline actually has a profound effect on your self-esteem. After two to three weeks, when you get into the habit of saving 1%, increase it to 2%. Keep working your way up, 1% at a time till you reach 10%.

The build up is so gradual that you will barely miss not spending that money. All the while you are changing your money habits and building your esteem and belief at the same time.

A very important point here is that once you have started this little habit, you must NEVER, EVER touch this money. Money must go one way only and that is INTO your account, never out. After a while, something magical starts to happen. When you open that Savings Account and start tipping money into it, it starts to attract more and more money to it. It is quite amazing. It’s like, when you know how to take care of money, more starts to show up. Opportunities that have been avoiding you begin to appear. Which leads me to Step 3- “Wedge Theory”.

“Wedge Theory” is the antithesis of previously mentioned “Parkinson’s Law”. In “Wedge Theory”, what you are doing is driving a “wedge” between income rises/unexpected windfalls and expenditures. How it works is you put 50% of any income rise or unexpected windfall into your Saving Account and spend the rest if you so desire, thus putting a gap or “wedge” between your income and expenditures.

In summary, to rapidly increase your savings and ability to save:
Step 1- Consciously change your feelings about saving and spending.
Step 2- Set a small goal to save 1% of your weekly income and gradually increase the percentage to 10% over a long period of time.
Step 3- Practice “Wedge Theory” to drive a “wedge” between your income and your expenditures.

Watch your savings take a quantum leap upwards when you begin to practice these steps. I hope this has been of benefit to you and that you achieve financial freedom for you and your family within your lifetime. God bless.