I Love Not Spending Saving!

I have a psychological problem.

I make an effort to not spend a certain amount of money. If I succeed in that effort, I tell myself I am saving money.

I didn’t save anything - I simply didn’t spend it. But isn’t this a form of saving?

Saving refers to the act of setting aside money or other resources for future use instead of spending it immediately. When we spend money, it refers to the act of using money or other resources to purchase goods and services.

One could argue these two behaviors are interchangeable. They both involve the act of withholding money and require a certain amount of self-control and discipline. Their outcomes are similar too - you may achieve more financial stability from both.

Others say the difference is obvious. Saving is when you set aside a certain amount of money for a specific purpose. When you don’t spend money, you resist the urge to make an unnecessary purchase. Since we are human and full of faults, resisting urges can be difficult to overcome.

Saving is tough, and this graph proves it.

We save no more than 15%, AT BEST, of our disposable income. Sure the pandemic changed all that, but only for a moment. The current level hovers around 5%. No wonder the majority of individuals feel like they are living paycheck-to-paycheck - we save so little!

By focusing on not spending at least some of our disposable income, we can prioritize our needs and wants. Sure, I want a brand-new vacuum, and a shiny new car, and would love to take a luxurious vacation, but what I need comes first. I need to build up financial reserves for when an emergency happens. I need to pad my retirement account so I don’t have to worry about working when I’m 85 and far less employable. I need to have the best financial position to combat any event that comes my way.

A lot of this is imaginary. We have no idea what will happen tomorrow let alone in the next 20 years. But we don’t want the urges of today to make us unprepared for the events of tomorrow. We’ll regret it.

The long-term benefits of saving far outweigh any immediate gratification we get today.

A great behavior to try? If you want something now, just put it on hold for a few days, maybe a couple of weeks. After that time, examine how you feel about the item. Do you still want it? Maybe. But does it hold the same weight as it did earlier? Likely no. Another tactic? Purchase a similar item, but lower in value. That difference is your savings!

Congratulations! You just saved some money! Now put it in an asset like a diversified index fund and watch it grow in value! (Unlike the shiny car which will decrease in value.)

No matter how you do it, saving or not spending that extra cash is good behavior and you are rewarding your future self. Both actions lead to a bit more money in your pocket, and ultimately, the safety and comfort of preparing yourself for any future surprises in this spontaneous life.

I’m happy with my psychological problem. I benefit either way!

Save On,

Chri