There are a hundred different ways to save a couple of dollars. There are even more ways to invest a couple dollars. I read a lot of them, myself. Every day, I’m learning that there are a myriad of ways to save or invest my hard earned money.
But it makes me wonder. Why do we read and digest so much information regarding the best way to use our money?
One of my friends thinks it’s silly I spend so much time reading and learning. “It’s simple,” he told me. “All you have to do is spend less money than you make. It’s just math.”
That stuck with me.
If my friend is right, and it’s a case of simple math, then why is there credit card debt at all?
I think it’s more than that. We know how to add and subtract, so it must be something else.
Then, it hit me. It’s marketing. And companies do a lot better than people who are encouraging us to save.
Spending Money is Sexy
Look at all the commercials. They all exist to get you to spend your money. And when you don’t have it, credit cards make it really easy to borrow from your future (hopefully richer) self. If you don’t have Joneses of your own, turn on the TV and look at the car commercials. They’ll give you a Jones of your own.
Enough of our peers buy into the sex appeal of spending money, that you’d have to be superhuman (or antisocial, in the case of my friend) not to notice. You get asked to go shopping with a girlfriend, or you hear how your coworker just bought a new gadget. So you think, “oh, my old gadget is stupid. I’ll have to get a new gadget, too.”
Saving Money is Not Sexy
Not at all. In fact, nobody on the TV talks about it — encouraging people to save money doesn’t help anyone other than the person saving money, so why would that be encouraged? In fact, the powers that be measure spending in order to gauge the health of the economy. You hear things like, “spending is up three quarters of a percent,” and you never, ever, hear, “savings are up for the third quarter in a row,” so even the economists among us don’t count savings at all.
You have to take it upon yourself to save. And that’s bold. And really stinking hard, sometimes! To swim against the current is really challenging. Our peers continually upgrade their lifestyles, and it’s really heard not to want to keep up. But we have to save. Saving our money, regardless of how much we earn, is key to getting ahead and making something out of our lives.
Strive to be Unsexy – or Redefine Sexy for You
When you have the urge to spend money, ask yourself why you want to do that. When you get a promotion, ask yourself why you are all of a sudden thinking about upgrading your car.
Remember those Joneses? They are likely to be up to their eyeballs in debt. They’ve filled their 3000+ square foot home (which they likely own less than 5% of!), and they may even be using credit to go on vacation.
Six Ways to ChangeYour Mindset:
- Educate Yourself: Read financial blogs that challenge the status quo. If you’re reading this post, you can already pat yourself on the back.
- Get new Joneses: Compare against a different peer group. Follow these bloggers for a start.
- Focus on What Matters: Read about minimalism and simplicity, and strive for that. I have found that there is a lot of peace in eliminating clutter — my house is cleaner, I need less space, and switching to having more space than stuff (rather than the other way around) has really helped me reevaluate the important things. Zen Habits is a great place to start.
- Automate: Automate as much as possible. Max out your 401K if you are lucky enough to have one. Max out your IRA (my vote is traditional). $458 a month for 12 months will get you to the limit for 2013.
- Trick Yourself: This is my favorite tip. If your bank account is small, then you act more frugally. Keep it small and make a game of it. Open up a savings account and start adding x dollars a month to it. Your x will vary. Do not add this account to your financial tracking software of choice. Out of sight, out of mind. Don’t make it easy to get to, and don’t put too much in it. Start with $100/month.
- Imagine You’re Retired, and you’ve saved up enough during your working years to live off 80% of your income. Live like that.
Or, it’s simple math and you don’t need tricks.
How do you save money? Did it take you a long time to get into the saving mindset?