How To Become A Saver, even if you weren't born one!
One of my earlier memories is when I was around 7 years old, and my parents realized I was hoarding money in my room that I had received from allowances and gifts. I was very much like a squirrel with my money, hiding $10 under the mattress, $30 in my sock drawer, $45 in my closet under a shoebox.
My parents were shocked! Why did I have so much money? Why was it scattered around the room? Why didn’t I spend it like a “normal” kid? I think I was pretty shocked too, but for two different reasons. I had never tabulated up how much I had, so I was pleasantly surprised by the tally of my stash. I was also surprised my parents cared enough to root out all the cash like effective truffle hunting boars.
They made me apply half of the money towards new clothes, which, at age 7, I was NOT excited about. The other half they put in the bank for me, which was a decently wise move.
This experience, along with data from a study by Stephan Siegel, associate professor of economics at the University of Washington, who studied 3,000 identical twins in Sweden, brought me to the conclusion that I’m probably in the 28% of people who have been genetically predisposed towards saving, a natural born saver.
If you’re one of that 28%, congratulations! Your financial life probably is a lot easier than those who are NOT randomly given that “gift”. But if you’re a bit of a spendthrift, and your money flies away and you don’t really know how, there are a few tried and true ways to activate your latent saving superpowers.
The most positive and effective way to become a saver is to have a financial goal you are committed to. It could be saving up to buy a house, or wanting a well-funded retirement, or anything else. You need to discover what you really value, what can overcome your naturally spend-y ways and get you on a better path.
The second most common way that people start saving a lot is by witnessing family members, usually older ones, who have not saved up enough to have a comfortable retirement, and learning from their experience. It’s said that the smart man learns from his own mistakes, but the wise man learns from the mistakes of others.
The hardest way to become a saver, but still a common one, is getting fired and realizing you don’t have enough money to live for very long without a paycheck. This can be a seriously rude awakening of your saving muscle, as it dawns on you that you don’t want that stress ever again. With the UAE’s economy contracting, this is something that is happening more and more here. Hopefully you can observe this lesson from those around you instead of having to go through it yourself.
Another way to activate latent savings characteristics is to start tracking your spending. It will make you more intentional about every dirham you spend and you will be able to notice where the “leaks” are in your bank account.
Even though I was born a saver, I have used all these strategies to bulk up my saving muscle. I’m now regularly saving 60-70% of my salary and buying assets like index funds and real estate so that I’ll never have to worry about a job again in a few years. This savings muscle is giving me a lot of power!