Based on financial projections in a current case, I’ve recently been wowed by the power of saving money. Radical, cutting-edge stuff, right? Truly, though, I’m understanding why financial tips on saving abound. It’s invigorated my own efforts to spend less money–or to be smarter about how I’m spending my money–and it’s also prompted me to be more intentional about pushing money into savings (strategy: “out of sight, out of mind”).
In my financial coaching work, I often work with clients who are trying to figure out where their money is going and/or how they can pay down credit card debt. With that work, focusing on just “saving money” is often too simplistic an approach. There are many, many factors that go into our financial habits and really effecting change requires being attentive to them. Also, just barking at folks to “save money” doesn’t work if that advice backfires and triggers feelings of deprivation or fear, both of which can lead to more spending. Lastly, some folks really need to make more money, such that saving is not going to get them where they want to be financially.
But, I digress. This post is really about how impressed I have been with what strategic saving can do. If you can make lifestyle changes such that you can “sneak” money out of your budget to grow, the results really can be astounding. Time is the magic, tricky ingredient that you’ll need on your side; please let me know if you’ve discovered how to generate more of it.
An advantage of saving is that you can start with what you have; in other words, you don’t have to “do” anything like get a job (or a raise), find a financial planner, etc. If it will plausibly and objectively meet your needs, you can just opt for the smaller size, the store brand, to use a coupon, borrow, rent, buy used, buy a part and do-it-yourself, trade, or make. If you do, you can keep a bit more of your money and it saves the trouble having to earn that money (and more, because of Federal tax rates of 10-40% plus any state income tax rates). To paraphrase Benjamin Franklin, a penny saved is actually more than penny earned.
Based on the research I write about here, a precursor to effectively implementing a saving strategy may be to think of your dear self in the future. Doing that will connect your short-term actions with your long-term goals. Me? I try to tell myself that my future self will have costs that I can’t even anticipate yet–some fun, some simply necessary–and although I can’t control them, I can control what I pick now. It works at times, and even that helps keep more money for me/us.
Save on!