HENRY is the latest money acronym to take hold: High Earner, Not Rich Yet. I like it.

Coined by Forbes magazine, it refers to high earners who have hardly anything left after they’ve paid all their bills.

Unlikely to be able to save for retirement, these big spenders are wasting some of their best earning years by not understanding why they’re behind the eight-ball.

It’s about ego

Author of The Psychology of Money, financial whiz Morgan Housel, says it’s less about what people earn and more about their egos.

“Spending a certain level beyond your basic needs is mostly a result of ego and social climbing,” he says.

He says wealth is just the accumulated leftovers after you spend what you earn.

“Accept that living below your means requires suppressing your ego to below your income.

“When you define savings as the gap between your ego and your income, you realise why many people with decent incomes save so little.”

This seems logical, doesn’t it?

Housel says: “One of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.”

It works in reverse, too. He says people who do well financially tend to not to give a damn what others think about them.

This statement made so much sense to me. I see it in my clients at The Money Mentalist, and I see it in myself.

I know that once I let go of desiring all the cool things and became more selective in how I spent my money and more satisfied with what I already had, my savings grew dramatically.

So, let’s get saving!

Saving is hard to do. Like exercise and a lot of other good habits we should all do more, it can be boring. So, how do we make saving fun?

Make saving fun

Start by realising that there are great reasons to save, other than for retirement.

The type of ‘fun’ saving I’m talking about is short-term savings for the stuff you dream about. I know it’s just as easy to pull out the credit card, but just bear with me.

Why don’t we save? For most of us, our brains are wired for instant gratification and we want everything now.

But back up the bus, think about anticipation.

Anticipation can boost your enjoyment.

Anticipation means we’re looking forward to achieving a goal, so dopamine kicks in and gives us a surge of pleasure when we’ve achieved it.

So, start imagining yourself on the beach in some exotic location, or see yourself lounging on your lovely new sofa, or doing a Gordon Ramsay in your brand-new kitchen (the odd swear word’s OK).

Combine that with seeing your bank balance grow and you’ll soon get very excited about saving.

Find a focus

We also put off saving because we don’t know what we’re saving for. Saving just for the sake of it seems a bit meaningless but later, when you get the hang of it, even this becomes easy.

If you don’t have a goal (or ‘focus’) on what it is you want, it really doesn’t matter what you do with your money. So, you fritter it away.

Once you decide you want something, you’ll get very focused. You’ll be off like a racing rabbit and before you know it, your savings account is bubbling.

In reality, we don’t save because we lack self-control. It sounds a bit harsh but it’s true.

‘Opportunity cost’

We don’t stand in a shop and think about the ‘opportunity cost’: what we can’t do if we spend that money now instead.

You should learn to say “no” to yourself. No, I don’t want the T-shirt right now, I’d rather enjoy a cocktail on the beach while I’m on holiday.

To become a successful saver, you need to get your mind into ‘savings mode’.

You need to do three things:

1. Have a clear goal, so you can focus on what you want.

2. Visualise enjoying what you want now, and you’ll find it easier to keep saving.

3. Learn to say “no” to yourself and practice self-control and delayed gratification.

Now you have your head right, this is what you do.

Baby steps to saving

Start small. Set yourself a 90-day savings goal. What can you save for in the next 90 days? It doesn’t have to be a lot. If you’re new to this, start with a small goal, say NZ$500.

• Open a new savings account. Give it a fun name: ‘My Beach Holiday’ sounds much more exciting than ‘Savings 25 Account’.

• Work out how much money you need to reach your goal. Divide that amount by the number of days you have, say 90. For example, if your goal is NZ$500 for a weekend away, then on average you need to save NZ$5.55 a day.

• Now you know your number, learn to say “no”. When you say, “Nope, I won’t have a muffin with my coffee today”, whip out your phone, go to your banking app and transfer the price of that muffin to your savings account. To add a bit more fun, for the Reference you might want to add, “No to a muffin!”.

Once you’ve mastered your 90-day goal, keep going. Set bigger targets and have fun saving.

You’ll be surprised how much your money behaviour changes once you have a clear focus on what you want and set out to achieve it.

Remember, the dopamine will be kicking in and you’ll soon be ticking off the things you really want out of life.

www.moneymentalist.com