How to go from being a compulsive spender to a compulsive saver

I used to be a financial avoider. I never thought about saving for the future. My thoughts about money revolved around buying things.

All that changed back in 2007 when a financial planning firm recruited me to do retirement planning for school teachers. That was when my eyes were opened to the shocking reality of the financial challenges we women face in retirement.

It became clear to me that the average American worker has no idea how much is really needed to enjoy a financially secure retirement. No one ever taught us these things!

From that point forward, I’ve made it my mission to make women aware of our need to embrace financial literacy. We need to stop sticking our head in the sand, which I was guilty of before 2007, so I totally get it. We need to inspire ourselves and learn the skills of good money management.

It starts with our mindset. We need to replace complacency with an eagerness to reign in spending and become compulsive savers.

“It’s not your salary that makes you rich, it’s your spending habits.”
~Charles A. Jaffe

If we’re going to save enough to retire when we want to, we need to be diligent in how we handle our finances on a day-to-day basis and keep a tight rein on spending.

We need to make smart decisions then stick with them over the long haul. We need to ask ourselves, “Which one do I want more? This new handbag, or a financially secure retirement?”

We need to ask ourselves, “Which one do I want more? This new handbag, or a financially secure retirement?”

I’m not saying we have to deny ourselves to the point of deprivation. But we need to be more intentional with our money. We need to be aggressive with our savings goals.

If I, a former compulsive spender, can become a compulsive saver, I’m convinced anyone can.

All it takes is a mindset shift and a decision.

For example, I was working with a client on this issue several months ago (before COVID-19). She makes a healthy six-figure income but doesn’t have any savings to show for it. By helping her create a budget, she can see where all her money is going. We came up with a plan to build her emergency fund first. This makes her feel empowered with her money.

As a result, she had a mindset shift, which changed her behavior. One day she found two twenty-dollar bills in a jacket pocket. Instead of spending them like she would have done before, she went to her bank and deposited the money into her emergency savings account. I was so proud of her!

It’s small changes like this that add up to big savings.

Even if you can only start with saving five percent of your salary, do that. Then work your way up to ten percent. Then twenty percent. Then thirty percent.

Once you’re saving thirty percent of your income, you’ll be living on the remaining seventy percent, which means you’ll only need to replace seventy percent of your pre-retirement income, not one hundred percent. Which means you may even be able to retire early.

Now that’s exciting!