The little known secret of big savings accounts

Good looks might be an accident of birth, but fat savings accounts usually aren’t.  And many of the people who have these robust finances, saving 20 percent or more of their income, use a similar technique, according to a recent study. (Spoiler alert: It has nothing to do with a daily $4 latte habit.) These Rich Dad sorts are not making any secret of their method, but you likely are not already doing the same thing. Want to tap into this top-rated savings strategy? Here’s how:

Study says: Scrimp on this

TD Ameritrade has a handy nickname for people who are able to save 20 percent or more of their paychecks. (No, it’s not “tightwads” or even “frugal beings.”) These people are known as “super savers,” and TD Ameritrade set out to figure out who they are and how us pretty mediocre savers can learn from them. While some of their spending habits lined up with everyone else’s, the investment company discovered super savers were much more likely to economize on housing costs. As a group, they spent 14 percent of their takehome pay on housing, compared to the 23 percent average.

The drain of daily decision-making

Part of the reason this technique may work is that economizing on housing is a choice you just make once, or once every few years. Then the automatic payments take over and you can go about your day. (You can even set up automatic contributions to your savings account from your paycheck, so you don’t have to choose how to spend discretionary funds at the end of each month.) When you focus your savings efforts on daily expenditures, it’s much more difficult. You must continually reaffirm those type of savings choices, like not eating out when you really want to or avoiding the shoe aisle at Macy’s on payday. Those everyday struggles take a literal toll on your brain that psychologists call “decision fatigue.” The mental exhaustion makes your brain look for the kind of mental shortcuts that can derail your savings on any given day.

And while someone who’s able to save 20 percent consistently may seem like the type who’s wound pretty tight, these super savers are actually opting for flexibility in their financial lives. “They may see expensive mortgage payments as a liability. Our data shows that they value the freedom to do what they want as well as financial security and peace of mind,” Dara Luber, senior manager of retirement at TD Ameritrade, told MarketWatch.

Could you save on housing, too?

Housing costs are the biggest expense for just about anyone, accounting for about a third of income expenditures nationally. And they’re not all that easy to control. The affordable housing crisis that’s been publicized in big cities like Seattle also hits rural areas, for example. And millennials struggling with low-wage jobs and student debt can have a tough time affording the down payment to buy a home. It’s counterintuitive, but owning can actually cost far less than renting, particularly in markets with lots of young professionals or a large student population.

But it’s still possible to save on housing and join the super saver group with its fat savings accounts. One way is to break with the crowd and look for more affordable houses with less square footage or in less expensive neighborhoods with public transit. (Note that the super savers also spent two percent less on cars and transportation costs than the average consumer.) Other movements that are gaining ground include tiny houses, roommates for older adults and simply moving to areas with the most affordable real estate markets, like Dayton, Ohio. These are drastic measures, sure, but the peace of mind from having a lush savings account and the simplicity of everyday financial decisions might be well worth it.