Recently, I asked five friends this question: How do you save money? "Buying things on sale" was the most common answer. "Bringing lunch to work," and "Finding the cheapest gas" were other responses. But only one person got it right: "I put it in a safe place." Bingo!

Cutting expenses is the way to spend less so you have money to save, but unless you are actually putting it aside for some future use, you're not really saving at all. You're only spending less.

No matter your situation, whether you are financially comfortable or in debt up to your eyeballs living paycheck to paycheck, you need money in a savings account that has your name on it.

Saving money quiets the must-have-everything-now monster that runs us ragged. It calms our fears. Having money in the bank promotes contentment.

Even if you cannot save a great deal of money right now, that's okay. It's not the amount you save in the beginning that matters as much as the fact that you make saving money a regular habit.

Ideally, you should save 10 percent of your net income. If you can't do that right off the bat, start with 5 percent or whatever amount you can, even if it's only a dollar or two each week. Determine the amount. Then, commit to it. Keep putting at least that amount into your account week after week. Quickly, you'll figure out how to make it three dollars, then five, on to 10 and beyond. Soon you'll be hooked on saving.

Cutting costs without sacrificing your lifestyle or causing some other area of your life to collapse is the way to grow a savings account on your current income. What you need are a set of basic principles that will guide you into thinking in new ways.

As with any meaningful change, it has to start with a change of attitude. Consumerism has become a religion that goes against the teaching of just about every other religion, belief system, or moral code. Think about what you really believe to see if your buying decisions are motivated by your values or by a retail sale schedule.

Ask yourself before you buy anything: Do I really need it? How often will I use it? Where will I store it? How will this look sitting on the table at a yard sale? How much will it cost to dry-clean [dust, polish, insure, fuel]? Sometimes, just stopping to think will prompt you to turn and walk away.

No matter how much or how little you have to save right now, develop a saver's attitude. Our beliefs and attitudes about money have a powerful effect on our behaviors. I've watched people with ordinary incomes do extraordinary things simply because they stopped feeling entitled. Instead, they determined that no area of spending was off-limits for serious cuts. They became habitual savers and that has made all the difference.

August 30, 2010

©Copyright 2010 Mary Hunt. Everyday Cheapskate is a Registered Trademark

Check out Mary's recently released revised and expanded edition of The Financially Confident Woman (DPL Press, 2008).

Debt-Proof Living was founded in 1992 by Mary Hunt. What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt. Today, "Debt-Proof Living" is read by close to 100,000 cheapskates.  Click here to subscribe. Also, you can receive Mary's free daily e-mail "Everyday Cheapskate" by signing up at EverydayCheapskate.com