The habit of spending can only be countered by habit of saving and investing. Habits are formed by thoughts or beliefs and ways. Since childhood, we are already trained to be spenders.
To be able to get out of this habit, we need to learn new habit of saving and investing. Final fix will be to be able to achieve the DISCIPLINE to Save and Invest. There are many instruments to use to use with their corresponding advantages and disadvantages.
Putting money in your savings account requires you to have discipline. You can be successful depending on how strong your emotional why or why you want to save and invest. But, money in the bank is easy to pull out and therefore is a weak instrument to use to create the habit and discipline. Furthermore, the interest rates are less than the inflation rate. Savings deposits earn less than 0.5% and are taxable while inflation rates are now at about 4% and higher.
Putting your money into stocks or mutual funds are your other options. These requires not just discipline but know-how on the technicalities and analysis of what stocks/equities or companies to buy shares from. The discipline factor here is also at great test as this instruments requires you to decide for yourself when and how much you will invest. The rate of returns are high as the risk of downtrends are also high. Moreover, the temptation to take out investments is always there too.
Another instrument you can get into are cooperative shares that are in salary deduction mode. This will ensure that you are forced to save and therefore eases out the requirement to discipline yourself. However, cooperatives normally do not have high yields or interest earnings . And just like investments that are placed on banks and stocks, normally, this is also easily "withdrawable" in the form of coop loans and coop withdrawals.
The best instrument you can get into is something that has due dates, something that you cannot withdraw until it matures, and something that is tax free and has rates of 8-10%. In our company there is an instrument that we have that you can have for as low as `3000 per month (depends on your age and needs) and you save and invest for just 7 years and you have fringe benefits of free annual PE, 2x/year dental care (cleaning and extraction), and has waiver of installments if disabled or worse case dies. It is really very easy to achieve the habit of saving this way as the discipline is built in. And the best thing about this instrument is that , no matter what happens, you can really complete your 7 year saving and investing time frame. This will ensure your 7 years of practice will develop the new habit of saving and investing and will ensure your success.
I pity those who really has all the intention to save and invest but do not make it consistently since they either use the wrong instrument, nor does not acquire the habit or discipline to save and invest. . Check this out to see what fits you http://6020hf.imgcorp.com/quote/kaiser
If you want to learn more about all these and be coached, just feel free to contact me.
Happy investing....
God bless !
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