Welcome together, we're going to explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home, a car payment, and you're struggling to get credit cards under control, or you may be getting a late start in life on saving for retirement, reduced debt increase wealth.com is a podcast to educate those to improve personal finances, whether it's eliminating debt, or making smart investments. Hello, Mr. Chuck here, and this episode, I'm going to be talking about how to increase your savings. But before I get there, in my last episode, I talked about budgets and I even gave you a link, my reduced debt, increase wealth.com website, and my show notes, there's a link where you can set up a budget and know what, where you're at how to get started. I also have a Excel spreadsheet that can be converted into an any spreadsheet application that does the same thing. But it does the math for you. When when doing a budget and getting it set up is just the start. How's that going to help you one you know your numbers, you know, you're happy numbers. And he should know you're happy numbers, what's your net income, how much you need to spend on transportation, housing, which includes utilities and clothing, food and entertainment. You should know a percentage for those items. And he should know how much your budget is. For those items. You have fixed expense. Those are expenses you pay every month no matter what. And you have variable expenses or expenses that change every month that says food would be different every month when you go to the grocery store, depending on how much how many times you go out to eat. And that's just the start. If you're having trouble saving money, the first thing you need to do, after you have your budget set up is to put dollar amount in your budget for savings. When you get your paycheck, immediately transfer that money into your savings account. If you don't see it, you won't spend it. That will help you increase your savings no matter what. If you've gone to the next step, and maybe you automated your budget and you downloaded a budgeting app, I would recommend having this app on your main computer at home and having a app on your smartphone if you're married and have a spouse, and you're both should be working together and look for one that we can both have an app on your smartphone that will make tracking your expenses much easier. And as always, I have a couple articles on why budgeting apps don't work. And then we're going to have a reasons why and how you can make them work. five reasons budgeting apps don't change financial behavior. That's why they don't work. And this is at blog dot cube money.com. And the number one reason is you don't have to use it daily. If you spend the time setting up your new app account, you're motivated to maintain your money is high. After all you spent time Lincoln, all your bank and credit card accounts. However, once you automated that data collection, you don't have to think about it on a regular basis. In fact, according to Lexington Law survey 26% of Americans check their bank accounts only once a month 8% or less than monthly. People are not even looking in their checking accounts. How do they know how much money do they have? They could have $5,000 in checking account and not know it or they could have a negative balance. And they probably know that because they're getting hit with overdraft fees. So you have to pay attention not only to your budget, but also Go here checking account. That's the only way you're gonna get your numbers on our control. Number two to complicate to manage a budgeting app do some of the heavy lifting when it comes to pulling in the numbers from your financial accounts. But to successfully change financial behavior you're required to put in work to if you're checking in with your finances only once a month, sometimes less frequently, you're looking at a lot of information to shift through and make sense of managing your budget in bulk through an app then gets tedious. This is especially true if certain purchases are categorized incorrectly. For example, it might categorize a latte purchase at Starbucks that's inside your target as shopping expense rather than as food expense. Also, not all budgeting outs account for all the details, it might come up if you paid for brunch with a friend using your debit card that are reimbursed later. These deficits add more complication to managing a budget and can be demotivating to sustain. And number three, it doesn't have real time consequences. And behavioral economics present bias occurs when you make choices that give you rewards in the present versus making choices to give you greater rewards in the future. This is commonly referred to as immediate gratification. Since many budgeting apps aren't a barrier or a presence in real time. Like when you're in an apartment store and bought a pair of shoes you hadn't plan on buying. There's no immediate consequences to bar you from making an impulse purchase. Instead, the immediate present effect is to reward of having choose in the long term reward of building an emergency fund is less enticing reward. The shifting of your spending habits from saving money for example, to buy and choose become a pass of act as your venture be reminded it happened during your self imposed budget review. But it's gonna be too late to change it unless you return the shoes to the department store and get your money back. You're already exceeded your monthly shopping budget and didn't meet your savings goal for the month. Do you see how that doesn't change a natural behavior. And number four, it doesn't hold you accountable. Often budgeting apps assume that your financial journey involves a story of one on you can hold you accountable, go in and analyze what worked and what didn't and making changes to do better next month. That's a lot to ask of someone who started a new budget or may have trouble keeping a budget. What budgeting apps don't always have the option for is inviting your support network into the financial picture. Your spouse, for example has a stake in your budget, you might be dealing with a shared household budget to manage or have shared life goals. Number five, it doesn't change financial behavior. Successfully staying within your budget each month requires more than a basic app. While budgeting app gives you an idea of your own willpower is a necessary part of the equation and those with low willpower are more likely to overspend says to APA. willpower is an internal resources that you spend like money. The more you have to expend willpower multiple times in a short period of time, the less willpower you'll have over time. If you're faced with multiple financial decisions in a short period of time, you're exhaust your willpower faster, making yourself susceptible for overspending. So how you fix all these things. You need to budget for the long term. And you need to take control of your spending. First thing you want to do is to sustain budget over time is automated necessities, setting aside funds for non negotiable expenses like rent, utilities, the monthly debt payments and things that you pay every month to set it up and automate them. Daily check in a budgeting system that force us to look at your budget categories and how you're doing on a daily basis. Maybe a budgeting app that will ask you what categories You want to put the purchase in, you open it up, take a look at it and categorize it. It's a simple concept like losing weight, calories in calories out, the app should show you every dollar coming in and out. A way to tag along with you and effective budget follows you everywhere you go. It doesn't give you an option to set your budget and cast it aside in a dark corner. Instead, it's a part of your day to day spending or savings, habit. accountability. The budgeting system itself lends an extra layer of accountability, or in encourage you to recruit your own personal accountability buddy to keep you honest about your progress. And it shifts your psychology and a vague desire to accomplish a goal or a want. Financial outcome isn't enough to keep you on track. A tangible and concrete change in your actual behavior is what will make a new habit and budget stick. When I talked about the different budgeting apps, the one I liked the most, which I can't think of the name. I recommended it because you can project forward and see what is coming up in within your budget. So you can plan for it. If you're gonna have a shortfall on your money, you can make sure you have enough money there to cover it. So you don't have to create new debt. I also recommend that you haven't installed on your home computer. And on a smartphone, maybe can even find one where you can have multiple apps for different people, you and your spouse, for example, that will then merge into one account on your home computer. This also should be something that you look at on a daily basis. Before you go spend. If you're walking through a department store, and you're looking for clothes, how much you have in your budget for clothes, if you don't remember, pull up the app, take a look, I got $300 keep your spending under $300. That's how you create new habits. It's something that you have to do on a daily basis. Unless you don't leave the house, don't go to the store. It's okay to automate the monthly payments you make every month mortgage payment or rent payment, all your loan payments, all your credit card payments, all your utility payments. That's okay. And when you go to the grocery store that should not be automated, because it's going to be different every time. When you go and put gasoline in your car. That's gonna be different every time. And those are things that you should be entering into your budgeting app as you're doing that process. And that way, you will see how much you have left, you'll know if you're going to be overspending and put your savings and the amount you want to transfer into your savings every month built that into your budget. No know how much every pay, you need to transfer to your savings. pay yourself first. He got to make the budgeting app work for you. Just because you have it downloaded on your computer, just because you have it downloaded on your smartphone. Maybe you went to the trouble of setting up some numbers in there. Are those numbers even close? Are they correct? Have you gone back a couple months add up what you spent and figure it out an average and put that average in there. Some months you may be a little bit over it some months, you could be a little bit under it. If you can keep your spending under control. And if you have a set amount budgeted for a particular item, say for utilities, and then I'll have gas heat. So in the summer I pay very little and no one or I pay for a lot. So I set up with the utility company to pay the same amount every month. I've been doing that for years and I never own money at the end of the year they adjust it and balance it out. No big deal. But I'm paying the same dollar amount every month so I don't go from $300 a month in a winner to $10 a month in the summer. paying my $50 or $60 or $70, eve y month, it's in my budget. And I know how much it is. Now th t you have a budget, you got a budgeting app on your smartpho e and at home, you're doing a fairly good job of keeping tra k of what you're spending mon y o But you're still having trouble. You're still have overspending that are holding you back. That's decreasing your savings. And that is slowing you down on building up your emergency fund. So now it's time to time you are creating new debt. So how you get around that? Well, you got to know what's causing your overspending. And here are the six causes of overspending that are holding you back. And again, it's n cube money, calm, America has an overspending problem, and you likely have an overspending problem. Let those words sink in. I'm sure everybody knows they're overspending a bit here and there. But is that a big problem? Yes. Let's look at the data. First, almost half of you don't have enough money to cover an unexpected $400 bill. Secondly, American families are not saving enough money for retirement. Before you go to down on yourself, it's essential to realize it's getting harder to get by. Over the past 30 years, the cost of a college education has increased by 700%. While wages have stayed flat, that means the young adults are starting with a considerable deficit compared to where their parents started. adjusted for inflation, the prices of homes have also increased over time. Sure, houses have also increased in sizes. But that doesn't change the fact that the average mortgage is bigger. Now forgive yourself if you're overspending in the fact that you're aren't alone. And that reading article is the first step to curbing your overspending. Now, it's the first step in recognizing a problem if nothing else. Today, we're going to break down six typical causes of overspending so that you can identify what is causing you to spend a little more than you'd like. Once you know your spending patterns, you're then be able to make some changes to get your spending under control, increase your savings in the article repeatedly making impulse purchases, are you make an impulse purchases, or go into the store and buy and baking supplies or cleaning supplies, and going overboard and buying things you really don't need or grabbing fast food on the way home, even though you have a pantry full of food, those would be all impulse buying. And the date it with advertising, buy this, buy this buy that you know, and it goes on and on and on. So make an impulse buying even more prevalent than what it should be not having automated savings. If you quickly check your bank balance on your phone and see that you got paid, you will get a false sense of how much spending money you have. This is because if you plan to save for retirement, your kids college, your first home, etc. Then all that money can't be spent. But we all know what ends up happening we spend first and save later. and rinse and repeat. And for that reason, one of the best things you can do for yourself is to automate your savings. First, make sure that you're contributing to your retirement plan at work, making the maximum amount that your employer matches. Second, set up your direct deposit at work. So that portion of your money goes directly into a separate account. If you're struggling with spending habits, well it's a good idea. If you don't see it, you won't spend it. One way you can help keep your spending on their control, when you're out and about is set up a separate checking account because with the debit cards now it's easy to do when you get paid every week or every two weeks or whenever your Payday is transfer a portion of their money into that account that you're gonna use for buying things. It could be impulse purchases, it could just be in my case is buying food when I'm on the road because I'm a truck driver and I set myself a budget. So every pay I transfer over that count whatever setup my budget, sometimes I use it all and run short, sometimes I have extra. So if you make those changes, then you want you spent that money on that card, not gonna work no more. And then you know, you have to wait till whenever the money gets loaded back in there. And you're not number Another reason is not tracking your everyday spending. And that's what I just said, is gonna help you track your everyday spending, you may manage your money passively, that means you don't pay attention or actively track how you spend. At the end of every month, you think to themselves, wow, I thought I had more money than this life gets in the way running the kids to and from activities and other commitments, means you have little time to do anything else. However, not tracking your spending, it results in you not realizing how much you are spending or how little you are savings, you might not even be tracking your spending, because you're afraid to see the damage. Again, knowing your budget and keeping track of your spending is very important. And then not giving yourself the freedom to spend. If you ever tried to dye it, then you know that it's easy to stick to any diet for a couple of days, it's much harder to stick for it for an entire week or even a month. Same principle applies to your money, you may realize that the number one thing you can do to save more money and to better manage your money is to make a budget. And that goes without saying but if you are too restrictive, and don't give yourself wriggle room, you're a bust your budget and no time. Welcome to the world of guilt free spending. This should be a part of your monthly budget that allows you to spend an unexpected things that you didn't plan for. Imagine a girlfriend or co worker calling to see if you'd like to get your nails done. instead of always saying no, you can use this guilt free spending to give yourself permission to say yes, just like I do. Weekly when I transfer money my other account, that's the same thing. It's my guilt free spending. I just happen to use it for food when I'm on the road, I time the times I use it for other things. The important thing is must have a budget in place for this to work, you can't skip the budgeting part and give yourself an extra 200 to spend every month. That's now how this works. The good news is that will make budgeting a lot more tolerable and sustainable for you. Which means you won't go off the rails and overspend because you're fed up with never been able to buy anything. So you set up your budget. And within that budget, you have your savings set up that you transfer first and you stay within your budget and you give yourself I call it miscellaneous money. I believe I have about $300 set up for it and I probably exceeded every month but my I got a lot of my debt paid off so I can do that. I don't recommend that you do that. If you want to get that debt paid down, or get your savings increase, then you need to stay within whatever you set and not planning your meals. If you think the only purpose grocery list is to serve to make sure you don't forget to buy the cinnamon sticks while you're shopping then you're mistaken. They also play a critical role in making sure you don't end up buying things you don't need. don't plan to buy or don't fit in your budget. We all heard this set advice that you should never go to grocery store hungry, or else you'll be tempted to buy everything if you're a food lover like me and you're always hungry thing. every trip to the grocery is a test and thankfully, a few minutes of planning before leaving home will mean that you avoid overspending and make costly decisions while you're there. Plan your meals know what you need to buy when you go to the grocery store. Not realizing the impact that your spending is having on your finances. When it comes to curbing a dangerous spending happen, a few things are effective as a dose of reality. I reckon man using a retirement calculator just see how much money you should be aiming to save every month. The chances are you have some ground to make up and you can use the thought of potentially not having comfortable retirement as a motivation for you to stop overspending. And the good news is it's never too late to try to turn things around. While it's also a great way to address underlying issue. overspending is simply a symptom of another problem. Whether overspending is a act of self sabotage, or a way to feel better to make up for shortcomings. The reality is that overspending were significantly affected Your ability to reach your financial goals. And as I said in the past, your retirement is something you cannot finance. And when you get to be 70 years old and you don't have any money, you can't go to the bank and says, I need to borrow $10,000 for my retirement, the pay my monthly bills around I asked you, what's your income? Oh, I make $2,000 a mont He can't pay your monthly bills on $2,000 a month. Now you want o borrow 10,000? How you expect o pay us back? Well, you can', they're gonna say no, it's th t simple. The younger year a e when you start saving f r retirement, the lower the doll r amount you have to set aside. o it is easier because time is n your side. With everythi g compounding, compounded intere t compounded rate of return you can set aside $100,000, over 20 years that will turn into probably 800,000. I don't know because I didn't do the math. That's this example. So using a budgeting app, that you've set up yourself, that you keep with you at all times that you look at every day, preferably before you make some purchases. Know how much your numbers are. When you're in the grocery store, you should know what's my monthly budget? I come here four times a month, what's my weekly? How much like can I spend today? Did I save some money last week. So I can spend it this week, because you still got the same monthly budget, if you don't have to spend in equal amounts four times a month. Some weeks may be lower, some weeks could be higher as long as you don't exceed that budget. And if you do exceed the budget, remember, it's an it could be an estimate, maybe you estimates a little low, you need to go back and look three, four trips to the grocery store divided up and added up divided by three or four, depending on the number you're using, and come up with a better average, and increase your budget for groceries for food in that category. It's an ongoing thing. And it's never ending you got to stay at it. Keep at it. Remember, pay yourself first and transfer the money to the savings account. If you don't see it, you won't spend it. That's the best way to get that done. And that's the best way to increase your savings. That's the end of another episode. I hope you found it useful. And if you'd like to share this episode with your friends, please do so. I'm open for any suggestions for improvement, or for information that you would like to talk about in future episodes. You can go to my Facebook page and leave me a message. I am more than glad to respond. To find my Facebook page go to reduce that increase wealth.com and click on the Facebook icon