The ultimate savings hack to try this year | Savings accounts

Are you unable to save money? You are not alone. Modern life comes with many sneaky little expenses, many of which have inflated in the past year with the rising cost of living.

But saving is as much a mental as a financial game. It can be hard to wrap our heads around what $1,000 really means, or how a budget should change our spending habits—especially if we’re an emotional (or impulse) spender.

So if you’re struggling to save money and have no idea what to do, it might be time to try out a simple yet game-changing technique: the drip feeding method.

The drip feed method is simple: park all your money in a savings account, then slowly withdraw it throughout the month to top up your debit card. Think of it as a mouse drawing small amounts of water from a large bottle.

Essentially, this strategy means your money is in save mode first – spend mode second.

To get started you need:

• A mobile banking app.
• A savings account with fee-free, unlimited withdrawals or transfers.
• A budgeting app or a bill reminder notification to keep track of important expenses.
• A debit card.

You may need to do some research or compare accounts to set everything up – remember that switching banks is easier than you think. But once everything is in place, it’s time to start saving.

When you get paid, you immediately deposit the check into your savings account. If you have a bill-paying account, enter everything you need for the month as well (like rent, utilities, and utilities).

Then top up your debit card or transaction account in increments of $100 – $200 weekly, as needed. Try to limit yourself to a weekly top-up amount, such as $400. In this way, you drip how much you have to spend each week. It keeps you honest, on budget and aware of what you’re buying.

When the next paycheck rolls around, what’s left over can go straight into a more permanent savings account (preferably one with an interest rate between 3% – 4%). Repeat the cycle and watch your savings grow!

Have you saved enough to leave untouched for a while? Consider parking it in a deposit.

Like all money tactics, the drip feeding method has advantages and disadvantages. Let’s break down why this strategy might work for you—and what downsides you should keep in mind.

Advantages of drip feeding

• Automatic in saving mode, not consumption. Savings mode can be hard to get into because it involves scarcity – something our monkey brains don’t like. But by consciously putting your paycheck into a savings account first and then drawing on it as needed, you can make sure that: “Yes, we have money. It is not small. It is abundant – but only in storage.” In addition, this prioritizes withdrawing your savings as little as possible.
  
• Stays in constant touch with your finances. Do you find it painful to look at your bank account and therefore avoid doing it? The drip feeding method can give you some exposure therapy since you have no choice but to look closely at your balance throughout the month. How else are you going to make the important refills?
  
• Breaks your paycheck into smaller, manageable chunks. Wrapping your head around $5,000 in a month can be difficult. Where will all the dollarydoos go? As a rule of thumb, our brains can’t visualize anything more than $100 or longer than a week. In a nutshell, large amounts of money over a long period of time: difficult to understand. But small change over a short period of time: easy!
  
• Turn your finances into a game. You know how your brain goes “Christmas” every time Mario clears a jump? The same dopamine rush applies when you stay within your budget. And the drip method encourages you to find ways to push your weekly consumption even lower, just for the satisfaction of saving more or having to transfer less. Essentially, you are programming yourself to make the weekly jump. (Check out these other game-like savings challenges).
  
• Shows you how big individual transactions really are. If you know you have $2,000 in your checking account, an $80 impulse purchase or two doesn’t feel so bad. But if you only have $200 in there, suddenly $80 feels like a lot! But the thing is: that $80 has exactly the same impact on your finances no matter how much is in your debit account. The drip feeding method does just that feel more expensive.
  
• Less of a disaster if your debit card gets hacked. If someone steals your debit card, no worries! You didn’t have much to lose in there.

Disadvantages of drip feeding your expenses

• You REALLY need to stay current on bills. Emphasis on it indeed! The last thing you want is to be hit with late fees if a utility or service provider tries to charge you and you don’t have the funds. Crucially, make sure you have a way of paying your rent in full and on time: if you don’t, you could earn yourself a black mark on the tenant register, hurting your chances of getting a new tenancy in the future. Reduce the risk of declined transactions by setting a bill reminder notification or allowing notifications from a budget app.
  
• Read the terms and conditions for your savings account. Unraveling the terms and conditions of a savings account takes some reading, but it’s important to find one that won’t hit you with overdraft fees, fees or penalties. No point in losing money on stupid mistakes!
  
• Works best for routine lifestyle. Sometimes life is a bit chaotic, especially if you throw in things like children, frequent travel or an unpredictable income. You may find the drip feeding method difficult or stressful if sudden or unexpected bills are constantly eating into your money.

Weigh up the pros and cons, and remember: there are solutions for all problems. You may need to tailor the drip feeding method to suit you, but that’s okay! Like all good plans, it is flexible enough to be changed.

For long-term thinkers (perhaps you’re saving for a travel budget after all), it can be great to set some savings goals. In this way, the drip feeding method has something to work towards.

Make your goals stick by turning them into SMART goals: Specific, Measurable, Achievable, Relevant, and Timely.

• Specific. You know what you are saving for and why.
  
• Measurable. It comes with a number. “Enough for one trip” is not measurable. $5000 is.
  
• Achievable. The goal is realistic for you. Start by seeing how much of your income the drip feeding method typically saves you, and plan accordingly.
  
• Relevant. The goal suits your wishes and lifestyle. A rainy day fund is valid! Cash in case of a zombie apocalypse is not.
  
• Timely. Set a deadline. No ifs, ands or buts. A cutoff date motivates you to reach your goal. If you have a hard time holding yourself accountable, get a trusted friend or family member to help you.

Good luck, savers!

Looking for more savings inspiration? Check out these 10 ways to save on living expenses. Compare savings accounts below.

^See Mozo Experts Choice Savings Account Awards information

Mozo provides general product information. We do not take into account your personal goals, financial situation or needs, and we do not recommend any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seek independent advice.

Although we pride ourselves on covering a wide range of products, we do not cover every product on the market. If you decide to apply for a product through our website, you will be dealing directly with the supplier of that product and not with Mozo.