I recently heard a radio program which was lamenting the negative savings rate in America. The guest was an author of a book about saving for retirement and naturally had lots of opinions on the subject. As usual she was touting her book and was giving tips on how listeners could improve their financial situation and save money. Among the tips were: Setting up an automatic debit from paycheck into savings account. Only having one credit card. Using cash to purchase whenever possible. Impose a waiting period on purchases to avoid impulse spending. and doing the math on a purchase to figure out the final price with interest.
All of these tips are good, but I’ve heard them all before in many different iterations. Every book or expose or report I hear, watch, or read, gives tips such as these and emphasizes how important it is for people to save money. What none of these reports, or books, or exposes make clear is why people should save money. Well okay, they say “for retirement,” but what is “retirement” to the average 30 year old? It is forever away. People need to stop saving for “retirement” and instead save for something specific.
So ask yourself, what is your dream? Do you dream of owning a farm in the countryside? Figure out how much it will cost to buy and to run, then save money hand over fist to make it happen. Set a goal that by age 60 you’ll be able to afford that farm and have enough money to keep it running for the rest of your life. Do you dream of taking a trip around the world? Do some research. Figure how much it will cost and set a goal for when you’ll have that money saved. Do you dream of never having to work again? Figure out how much money you need to have saved so that you can live on the interest. Do you dream of making pottery and selling it? Figure out how much money you need to have saved so that you can live on it for two years while your pottery business gets off the ground. Do you dream of owning a fancy car? Figure how much it will cost to buy it and maintain it, then save for that.
The key here is to plan ahead. When Howard and I got married we had several goals. We wanted Howard to be able to earn his living creatively. We wanted to own a house. We wanted to have several children. We structured all of our spending to accomodate those goals. When Howard got a pay raise we wouldn’t raise our standard of living much, mostly we’d save it against a planned goal. Even when we had the house and the kids, we still spent carefully because we had the dream of Howard being able to make a living as a cartoonist. We did spend some money on luxuries like nice furniture and new cars, but each of these purchases was balanced against the larger goal. Each time we carefully considered whether the expense added more value to our lives than having Howard work from home would. Eventually we reached the day when Howard quit Novell. That was scary and I confess I did some second guessing about some of the things we’d chosen to spend money on. But we’ve scraped by and it looks like we’ll get to keep on going.
Don’t just save for “retirement” save for something specific. Know what your dreams are and take steps to make them reality.
Nice, well built furniture is not a luxury, especially with kids. Spending the extra means you don’t have to spend it over and over again. (We had that problem when I was growing up, and we probably spent half again as much replacing things between when I was born and when my youngest sibiling got to highschool as we would have spent on furniture that would have lasted. (Ok so we would probably still have bought the papasans, but they really ar luxuries.
Nice, well built furniture is not a luxury, especially with kids. Spending the extra means you don’t have to spend it over and over again. (We had that problem when I was growing up, and we probably spent half again as much replacing things between when I was born and when my youngest sibiling got to highschool as we would have spent on furniture that would have lasted. (Ok so we would probably still have bought the papasans, but they really ar luxuries.
Forget the Tightwad Gazette! Sandra, you need to write a book!
This is the best talk about saving for the future that I’ve ever heard!
Plus, you could give pointers from your own experiences on how to spend less, spend wisely AND recipes and how to shop smarter.
Now, THAT’s a BOOK!
Forget the Tightwad Gazette! Sandra, you need to write a book!
This is the best talk about saving for the future that I’ve ever heard!
Plus, you could give pointers from your own experiences on how to spend less, spend wisely AND recipes and how to shop smarter.
Now, THAT’s a BOOK!
Thanks for the ego boost. Unfortunately most of my best ideas about saving and spending less were gleaned from the Tightwad Gazette. I’m just putting the ideas in my own words here.
I will be writing a book someday, but it’ll probably be fiction.
Thanks for the ego boost. Unfortunately most of my best ideas about saving and spending less were gleaned from the Tightwad Gazette. I’m just putting the ideas in my own words here.
I will be writing a book someday, but it’ll probably be fiction.
I would second that. I would most certainly buy a book from you on frugal living–even if it were only disseminated by ebook. Your advice is practical and accessible, not to mention the fact that it’s all been the result of experience. The Tightwad Gazette may be similar, however I can’t imagine that you don’t have anything to add or refine.
I would second that. I would most certainly buy a book from you on frugal living–even if it were only disseminated by ebook. Your advice is practical and accessible, not to mention the fact that it’s all been the result of experience. The Tightwad Gazette may be similar, however I can’t imagine that you don’t have anything to add or refine.
In my case, I save to prevent stress. See, not long after my son was born, I was laid off, and couldn’t get a job. We got farther, and farther, and faaarther, behind on the bills and the rent, until we ended up having to live with (shudder) my mother-in-law for a while. It was a very trying time for us.
Not having enough to pay the bills and such and an emergency stash is a source of tension in the back of my independence bone, and I just.. well, if there’s no cushion I get itchy.
Still and all, your reason is much less terror-based, and thus probably much healthier. haha!
In my case, I save to prevent stress. See, not long after my son was born, I was laid off, and couldn’t get a job. We got farther, and farther, and faaarther, behind on the bills and the rent, until we ended up having to live with (shudder) my mother-in-law for a while. It was a very trying time for us.
Not having enough to pay the bills and such and an emergency stash is a source of tension in the back of my independence bone, and I just.. well, if there’s no cushion I get itchy.
Still and all, your reason is much less terror-based, and thus probably much healthier. haha!
What you are telling me is that you dream of having enough money so that you never have to be supported by relatives again. Having a cushion is a very valuable goal. In fact right now our primary financial goal is to rebuild the cushion that we have been steadily depleting. That cushion allows us to not be stressed during times when money is slow to come in.
BUT having a cushion should not be your only goal. Once you have an adequate cushion there needs to be some other dream that you save for. Otherwise you risk becoming a miser who hoards money for the sake of having it rather than for the sake of what it can accomplish.
What you are telling me is that you dream of having enough money so that you never have to be supported by relatives again. Having a cushion is a very valuable goal. In fact right now our primary financial goal is to rebuild the cushion that we have been steadily depleting. That cushion allows us to not be stressed during times when money is slow to come in.
BUT having a cushion should not be your only goal. Once you have an adequate cushion there needs to be some other dream that you save for. Otherwise you risk becoming a miser who hoards money for the sake of having it rather than for the sake of what it can accomplish.
Oh, no, it’s not the only goal. It’s just the one screaming at me the loudest just now.
Later.. well, there’s a whole laundry list of things I want to do “later.” In the past, those things were put first, which is part of the lack of cushion. So… cushion first, then we go forth.
I’ll never be one of those misers… it’s just not in me.
Oh, no, it’s not the only goal. It’s just the one screaming at me the loudest just now.
Later.. well, there’s a whole laundry list of things I want to do “later.” In the past, those things were put first, which is part of the lack of cushion. So… cushion first, then we go forth.
I’ll never be one of those misers… it’s just not in me.