When people hear that someone has money, we tend to think that they have a high paying job, they were born into money, they hit the lottery, or some other method of instant windfall. Rarely do we consider that the person might have just been responsible, and saved their money.
I’m a huge fan of saving for goals (not that I do it all the time), and I believe that saving for a goal is a great way to reward yourself for being responsible. It also helps to reduce the amount of debt you take on. Had you not saved for the item, you probably just would have financed it.
The problem with savings is that we just never seem to have enough. Everyone has been in this situation, and generations of people will continue to experience this shortfall. But, is your inability to save really the result of a shortfall, or is your shortfall the symptom of something else?
Consumption Tendencies
Everyone consumes. It doesn’t matter if you’re Mahatma Gandhi or Warren Buffet, we all consume. Some of us consume more than others, but no matter who you are, you consume at some level. One problem, especially here in the United States, is that we consume in massive quantities.
It doesn’t matter if it is TV, food, electronics, cars, or houses. We love to consume, and we do the exact same thing to our income. We have a subconscious need to consume the money left in our bank account. Often, we refer to the positive amount of money after bills in our bank account as:
- Play money.
- Spending money.
- Pocket money.
- Extra.
- or leftover money.
Accidental Savings
It’s a cute idea, but it really doesn’t exist. Savings happens because of planning, and execution of those plans. If you expect to consume all of your income, but somehow have money around when your car breaks down, when your kid goes to the hospital, or when some other disaster strikes, then you’re a very hopeful person.
Unless you purposely saved your money, then you probably won’t have a cushion to fall back on. This is why I’m such a huge supporter of emergency funds. They are a purposeful account, with a goal in mind. Meet that goal, and you have a nice cushion if something happens.
Ways To Force Savings
So, if savings won’t happen by accident, and you’ll probably consume all of your extra money if you don’t do something with it, what are your options? You have to force your savings. You should come up with a plan and stick to it, but as a start, I suggest putting your money into less liquid forms such as CDs, 401Ks, Employee Stock Purchase Plans, or any other vehicles that will make your money harder to get to.
When you have to pay a substantial fee, or it’s just inconvenient to access your money, you’re less likely to buy that big TV. These are just a few ideas that I employ to force my savings, but you should do whatever suits your family’s needs, and your situation. Take a small step forward by earmarking a small amount of money and socking it away.
You might be thinking “I don’t have enough money to do this with” but you would be surprised. As you pull money out from under yourself, you make adjustments to compensate, and you really won’t notice what is missing. That has been my experience anyways. I tend to not miss the money that I put away, and I’m relieved when I know it is there.