Money Saving Habits I Learned at 18

I recently read the book The Power of Habit by Charles Duhigg as part of a book club at work. The book takes a great look at habits from many different perspectives—from individual to societal habits.
Duhigg breaks down all habits as a simple cycle: Cue, Routine and Reward.
In my family, I've always had the reputation of being a saver but saving hasn't always come naturally to me. Reading this book got me thinking about my money habits and how these habits have helped me become a more effective saver.
First Savings Goal: Braces
Getting into the habit of saving really started when I decided to get braces at the age of 18. At the time I was taking a break from university and working two part-time jobs.
I was able to set up monthly payments of $250 with my orthodontist that would be automatically withdrawn from my chequing account. All I had to do was make sure there was money in the account!
And so began my money-saving habit. From each paycheque, I'd set aside some money for my braces payments. Because the payments were withdrawn monthly, it was easy to achieve this super short-term savings goal and it felt good to know my money was going towards something I really wanted.
Here's how it worked in the Cue, Routine, Reward cycle:
Cue |
Routine |
Reward |
Payday |
Put $250 towards braces monthly |
Straighter teeth |
Once I finished paying for my braces, I was so used to saving that I continued to set aside the same amount each month.
My Next Short-Term Goal
Not long after, I graduated from university and had to start paying back my student loans. Since I had never really given up setting aside money after paying for my braces, paying back my student loans didn't feel like much of a burden—I was simply redirecting funds I was saving anyway.
I knew I wanted to pay off my student loans quickly, so rather than paying the minimum payment amount as outlined on my loan agreement, I decided to challenge myself to put $350 towards my student loan payments each month. Similar to my braces payments, I had the funds automatically withdrawn each month.
It took a few years to pay off the loans, but because I was paying more than the minimum, I paid it off more quickly than expected.
Cue |
Routine |
Reward |
Payday |
Put $350 towards student loans monthly |
No more student loan debt |
I continued to set aside money after paying off my student loans, this time redirecting the funds to a savings account.
Saving for the Long Term
I set up an automatic transfer that would occur every payday. The money from my chequing account went into various savings accounts that I used for different goals: retirement, a down payment on a house, an emergency fund and vacations.
Unlike paying for braces or paying off student loans, some of these savings goals were a little bit harder to save for because they didn't have a fixed amount or an exact end date. Even though my objectives had shifted from more tangible and immediate goals, like getting braces, to long-term goals like retirement, I already had an established savings habit in place.
Cue |
Routine |
Reward |
Payday |
Put funds towards retirement and an emergency fund |
Financial security |
It can take some time to create positive savings habits if you've never done it before. In my case, it helped to start with a short-term goal with immediate effects I could see before moving on to the big, long-term savings goals.
Over the years I've kept challenging myself to save more and more, and although I haven't quite hit all my goals yet, I know I'm on the right track to reap the rewards in the future.
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