If you tried to suddenly save 20 per cent of your budget that you usually spend starting tomorrow, you'd probably fail. That's a shock to the system. Instead, incrementally build up to a healthy savings plan over time. Photo by jridgewayphotography.
As personal finance site Afford Anything explains, most of us suck at making huge changes to our budget. Small steps — the kind you can make without ever really noticing the change — are much easier to handle. So, if you want to start saving more, start with a one per cent change to your budget:
The idea? If you boost your savings one additional per cent every month, by next year you'll save 12 per cent of your income more than you do today.
You can customise this in whatever way fits you best. Some people take HUGE leaps, saving 5 or 10 per cent in one gigantic move. Others take smaller steps, saving an additional one per cent every 2-3 months (which adds up to an extra 4-6 per cent of your income per year).
Eventually you might hit a limit where the stress of the change becomes too painful (because saving 100 per cent of your income would probably be impossible). However, this method helps you discover what that limit is in real life, rather than avoiding saving out of fear.
The Incredible Power of the 1% Margin for Improvement [Afford Anything via Rockstar Finance]