When we dip into our savings, we are choosing the present moment over our future - immediate gratification over delayed gratification.
We are basically saying to ourselves “this purchase I am making right now is more important than the goal I am saving towards”.
Sometimes that might actually be the case. For example, when you need to take money from your emergency fund for something like car repairs or a new boiler. But when it comes to long-term savings for your goals such as a holiday, a new car or a house, it’s important to get into the habit of saving and NOT dipping into it.
Here’s how I do it:
1. Make your savings goal realistic
Be honest with yourself and realistic about how much you can save each month.
Sometimes we save too much in one month and have to dip back in to pay for things we forgot about or didn’t budget for. When this happens, remember you are far better off putting less money into your savings and not dipping into them, than putting in too much and needing to take some back out again.
2. Find ways to make some of your savings harder to access.
Always make sure your emergency fund is accessible so that if anything happens and you need access to that money, you don’t need to worry.
But find ways to make the rest of your savings harder to get to access.
With Zopa’s Smart Saver account, you can lock away your money with the boost function - depending on which you pick you have to give 7, 31, or 95 days notice to access the money.
3. Create a vision and keep going back to it
Create a vision for your savings goals and attach an emotion to the reason you are saving.
This will help you make mindful choices and you will be less likely to dip into your savings account and sabotage your progress.
If you do go to dip into your savings, tap back into the vision of what you are working towards. Ask yourself “is this purchase right now going to take me closer to or further away from my financial goal”.
Bringing this level of awareness to your financial decisions is going to be key to building a good savings habit.