How to Make the Habit of Saving Instead of Spending?

It’s not how much money you earn.. It’s what you do with what you earn.

If you are living in the city, a place where several malls are conveniently located closed to your home or office, there is temptation to spend more, instead of saving or investing. If there are mall sales, it makes it more tempting to spend.

I remember a time when I was still newly employed. Freshly out from school, finally earning my own money, my financial habits was to spend more than I save. Initially, my salary was minimum wage, as such, it was just enough to spend it for my basic needs, such as food, transportation, basic clothing, while the rest, I give it as allowance at home. But as I stayed in the company, I was exposed to watching movies on weekend, dining in to expensive restaurant, seeing branded clothes, bags and shoes, traveling to places, expensive gadgets such as cellphones and laptops, and many more list of things to spend. In the beginning, I wasn’t attracted to it, but later on I started to like it too. I started eating out instead of eating at home, I started buying more expensive clothes, bags and shoes, I started watching movies in cinemas, I upgraded my phone and bought my first laptop. Back then, buying a laptop was really expensive. My bad spending habit continued for a few months until I realized I was spending more than I was earning. Sometimes I even borrow from my sister so I have money to go to work. And that became my wake up call.

What are we spending for?

To be happy in life, you must learn the difference between what you need versus want.

Our spendings can be categorized into two: 1) Need and 2) Want


We spend for needs when we buy basic and necessary things or services to live and survive in life. Example are basic shelter, food, electricity, water, phone and Internet bills, basic clothing, transportation, education, etc


Anything in excess of need, I classify as want. Want is not necessary to live and survive life, we just wish for such thing or service. We spend on things we want when we spend and buy for new additional clothes, shoes, bags, and other unnecessary/luxury stuff. I call add-ons to the basic. We spend for services we want when we dine out, watching movies in cinema, go to salons and spas, traveling, and other means of entertainment.

I recently attended an event called “Wealth Summit” of the exclusive group the Truly Rich Club founded by Bo Sanchez, of which I am a member.

Our group vision is to teach and spread financial literacy in order to help you invest for the future, avoid the common trap of spending all your hard earned money during your working age, and then retire poor despite earning a lot in your youth. If you wish to join us in Truly Rich Club, click here.

In the wealth summit, there was a speaker, Edrick Mendoza of ANC On the Money, who shared this valuable insight he got from his dad:

If there’s anything you need no matter how expensive spend for it. If there’s anything you want no matter how inexpensive save/invest it

How to Make the Habit of Saving Instead of Spending?

I love this topic because not only do I see a lot of people who spend more than save/invest, but because I too was guilty of this bad money habits.

The habit of saving and investing more than spending is more of value rather than skill. ~ Rose Fausto of

If when you were a child, your parents teach you the value of saving more than spending, you will more likely grow up saving more than spending. But if when you were a child, you were given whatever you want and your parent didn’t teach you the value of saving, you will more likely grow up spending more than saving.

If you are more of the later than the former, here are the few steps you can take today to help you get into the habit of saving instead of spending:

1. Monitor your earnings

An important first step is to write down and monitor how much you earn.

Earnings can come from your salary, business, investments, royalty, and/or allowances. In accounting, we call earning as income.

If you’re an employee, earning you write should be gross salary less the tax and other government required deductions such as contributions to social security, health, housing, etc.

If you’re a business owner, earning you write should already be gross cash sales less all the company spendings/expenses and taxes.

If you’re earning from investments, royalty and other passive income, earning you write must be net of tax and other incidental fees.

You monitor earnings/income instead of gross sales/salary because this is the cash you actually receive. It is your available cash.

2. Monitor your spendings

The next step you need to make is to write down and monitor your spending.

Spending are the products or services you buy, in cash or on credit, whether it’s a need or want.

Sample spending are rent, utility, food, amortization of house and car loan, clothing, travel, medicine, hospital bill, tuition fee, book, supply, transportation, and many more

Monitor your spending in order for you to know where you put your income. To know what are things or services you buy. It will make you aware of how much or less you spend.

Personally, when I do this step, it serve as a review and reminder on how poor (or well) I manage our finances. There are times I’m not happy with myself when I review my current spendings, that’s why the next month, I make an effort to do better. When you do this habitually, in the future it will be natural that you think before you spend. When you are tempted to buy, you will be asking yourself, do you want it or you need it?

3. Compute the difference

Once you already have a list of your earning and expense, the next step is to compute the difference.

Computation will be:


To know if you are managing your income well, or you are spending more than you earn, let me illustrate to you below scenarios:

A. When EARNING > SPENDING = it means you are able to manage your earning to be greater than  your spending. As such you have cash available for saving and investing

B. When EARNING = SPENDING = it means you spend exactly equal to all your earning.  In accounting we call it break-even because what you earn is just enough to your spending.

C. When EARNING < SPENDING = it means you spend more than you earn. Your cash balance is already negative. This scenario can cause you financial stress.

4. Create a financial goal or budget

At this point, you already know how much you earn, spend and the difference. The next step is to create a financial goal or budget which is better than your current status.

When you set a financial goal or budget, keep this formula in mind:


We call this “pay yourself first”. It means you save or invest your earning first before you spend it.

5. Take conscious action

There is a saying that goes, knowing without doing is not knowing. It means that even if you study or read all the books on financial management, you’ll still be trap with financial stress if you just know it but do not apply it to practice.

Again, I’m guilty of this, because there are times I let my emotion control me, especially when it comes to luxury bag.

When I’m relaxing, there are times I look at websites of luxury branded bag. I know, I shouldn’t, but bags are like artwork to me. Their beautiful and valuable. I know, I’m just making up an excuse. Anyway, since bags are my weakness, when I check on the site, naturally it creates “oh I want it or oh I wish I have it”. So if there are “scheduled” meeting or event in Makati, I will pass by the store “just to check it” if the picture is as good in real life. But since I’m financially conscious, I won’t buy it. Then months will pass by, I have another “scheduled” meeting in Makati, I’ll pass by the store again, to “just check it” once again. Then another month pass by, I will repeat the same process of “just check it” once again. My husband noticed my behavoir of “just checking it” repeatedly for 100x that he once said “why don’t you just buy it or just stop checking it out”. But there are times if I’m lucky (or cause he loves me dearly) he will buy it for me just for me to stop “just checkin it”. But then he later discover, I won’t stop cause once I buy it, I find another thing to “just check out”.

I’m sure many can relate to this. Even though we have conscious choice to manage our finances well, but our unconscious mind or emotion is so powerful that we cannot control it, we create another habit that still leads us to wanting things/service that eventually leads us to spend.

So when my husband pointed it out to me that the “just check it out” is a delaying tactic to buy, that’s when I took conscious actions. Now, I stopped checking websites of luxury bags. When I relax, instead of browsing, I write or read a book. Then I make a conscious choice that if I’m in the mall, I’ll just stay and hang out in once place and I don’t look around or window shop. Or totally avoid going to the mall.

In your case, reflect what are your actions that leads you to spending. And start making conscious choices to avoid those action that create your unconscious desire to want and spend

6. Repeat the process at least every month

Financial success can only be achieved by consistent habit of earning, investing and spending less. To create such habit, you have to repeatedly do it.

For monitoring earning and spending, you can do the daily of writing it down as you receive earning or for every spending. And then just look at it and analyze it monthly when you do step 3.

This is what I’m doing currently, I use an application to record all the earnings I receive, where I spend or invest it. Then reviews it once a month.

You may start to do it now for your own and begin the habit of saving and investing more than spending.

7. Make a habit of learning about financial management

There’s a saying that goes “you become like the five people you spend most of the time with. If you know this truth, you will be careful with who you spend most of your time with”

The last but not least step, if you are serious in creating change in your financial status and habits, join a group that has the same vision as you or has members who are already where you want to be.

In my case, I joined the truly rich club of Bo Sanchez. Since 2008, I have been reading books of Bo Sanchez such as the My Maid is Investing in Stock Market. But I only joined the truly rich club in 2013. At first I was just learning online and I don’t attend the events. But in 2015, I started attending monthly/quarterly/yearly gathering. And the difference was huge, because in attending the gathering, I am able to talk directly to the mastermind mentors, and meet people who already achieved the financial success I want.

Truly rich club also serves as a reminder to keep financial management a habit and a part of my life.

I hope you were able to learn from this article. For a final note, let me leave you this quote:

Money was never the end goal. It’s only a means to do what you want to do. You should have money saved or invested that is full tank so you don’t have to think of money



  1. It’s really difficult to save when your earnings is not enough for your daily needs. What we need to do is to find ways on how to increase our earnings or income and maintain your current spending habit .

  2. thank you for leaving a comment. Although increasing our earnings or income can be an added option, but may also be difficult for some people to do. That is why I think it’s important to learn to save and leave below the means first and then increase income. I have seen people who’ve increased their income but still cannot save if they don’t develop such habit of saving.

  3. yes, you’re right ma’am but it’s really difficult for some people to save.. this may be because some people were not taught the value of saving at their young age… I can relate to this because i find it difficult to save…& It’s funny , i’m an accounting grad, but i didn’t managed my previous earnings properly..

  4. It’s not unusual that even accountant fail to manage their personal finances. Cause personal finance wasn’t really included in our curriculum in college. If you wish to learn how to manage your income, save and invest, you may start by learning how in Truly Rich Club.

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