Creating a Savings Mindset in Recovery

Managing money is a life skill that many people in recovery may not have learned or lost over the course of their active addiction. Learning new techniques to handle money responsibly is an important part of recovery. Learning to budget and save money are key to creating the financial future you want.  

Figuring out how to break unproductive financial habits and start to regularly save money can be overwhelming. For someone in recovery, money can be a powerful relapse trigger or set off a need to spend to replace previous addictive behaviors or uses of money. 

But with making savings a priority – making your future needs more important than your current wants — it may be easier than you think to tweak your spending and save money.

Here are 10 ways to create a savings mindset that can help you develop good money habits and reach your financial goals.

Live Below Your Means – Basically, spend less than you earn.When you live below your means, you give yourself the opportunity to save more money and create healthy spending habits that can benefit you in the long-term.

Know Where You Stand Financially – Pay attention to the money coming in and what you are spending it on. Understanding your spending habits is an important step to taking control of your finances. Tracking your spending will help you see where your money goes. Make sure you are spending your money on things that matter rather simply spending on impulse.   

Identify Needs vs. Wants — A need includes life’s essentials – a place to live, food to eat, transportation to get to work, medical care, insurance, utilities, etc. A want is an expense that can make life more comfortable, but you can live without. So, before you spend money on something, pause and ask yourself if you actually need it.

Create Savings Goals — When setting financial goals in recovery, it is important to start small. Set financial goals that are attainable and don’t trigger undue stress. Want to pay off a credit card bill? Start an emergency fund? Take a vacation with your kids? Be specific. Say you want to save $600 in an emergency fund in the next six months; you will want to set aside $100 each month or $25 each week to reach that goal.

Pay Yourself First – Focus on saving goals and long-term financial wellbeing ahead of immediate needs, such as bills or entertainment. Pay your future self by saving before you do any other spending. Even if it is just $10 each week, get in the habit of setting money aside for future goals or unexpected expenses.

Set It and Forget It – Automate your savings. You can set up your credit union or bank account to automatically transfer funds from your checking account into a savings account every week or month. You can also set up your direct deposit to automatically transfer 10% of each paycheck into your savings account. Out of sight, out of mind. You won’t even miss the money.

Get Rid of Debt — Paying off debts, loans, and high interest credit cards can seem monumental when you add all of it up. However, just like taking recovery one day at a time, you can take the same steps towards financial satisfaction by paying off one bill, one payment at a time. And with every debt you eliminate, you will have more money to put towards savings.

Plan for the Unexpected – Creating a special emergency fund will help you avoid going into future debt when an emergency arises. Start with a goal of saving $500 in an emergency fund. Determine how much you can set aside each month. Once you reach that goal, bump it up to $1,000. Ideally, you want to have at least one month’s worth of living expenses set aside in your emergency fund.

Spend Extra Income Wisely — When you get a bonus from work, inheritance, or tax refund, put it to good use. If you owe money on a credit card or have some other debts, you’ll be better off using those funds to pay off these obligations instead of stashing it away. If you’re debt-free, using that extra money to start or build your emergency fund is a great option.  

Take Advantage of Retirement Savings Plan — If your employer offers a 401K match and you aren’t taking full advantage of it, you’re missing out on “free” money. Start small. You can contribute 1-2% and increase your contributions over time. You may want to pay off any debts and have an emergency fund in place before starting to save for retirement, but you’ll want to do this as soon as you can.

If this seems like a lot to take on, you don’t have to go it alone. Reach out to your sponsor, a family member, financial advisor or staff of your local credit union or bank with any questions or for guidance. There are also many online resources available that can help you get started.  There is no better time than now to create a savings mindset to build your financial future.

For more information about building your savings, paying off debt or other financial questions, reach out to a Town & Country Member Services Representative at 1-800-649-3495 or send an email to info@tcfcu.com.