Saving Money: The Missing Link
Love Saving, Grow Your Wealth
by Joe Atikian
SAVING MONEY: THE MISSING LINK. Copyright 2011 by Joe Atikian.
Smashwords Edition
All rights reserved. No part of this book may be reproduced in any form or by any means, mechanical or electronic, including photocopying, recording or by any information storage or retrieval system, without the prior written permission of the author.
The full contents of this book, including all examples and figures, are comprised of the author’s opinion and are strictly for information purposes and do not constitute financial or other advice. No assurance of financial or other gain is intended or implied. There is always risk associated with making financial decisions. The suitability of any of this book’s contents to any person’s situation can only be determined in consultation with a qualified financial professional. The direct or indirect consequences of any use of the information herein are the responsibility of the user. The author shall not be liable for any loss or damages whatsoever.
Cover design by Joe Atikian
For more information visit the companion website at http://www.savingmoneybook.com
Table of Contents
Finally, Spending What You Saved
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Introduction
This is one of the shortest books on saving money that you are ever likely to find. It was kept short in order to focus on one key point in the field of personal finance: feeding the incentive to save. With so many books, websites and discussion groups on the tedious business of saving money there is no need to repeat the hundreds of details and tricks that people already know. But there is a need to clearly show why those don’t work very well. And this book does exactly that. It also explains why saving money can be easy and highly enjoyable instead of tedious.
There is also a need to distinguish a tactic like coupon clipping from saving money. They are not the same thing. For example, coupons may help to stretch your spending but they will not help you save your money. Just think, have you ever found a coupon, say for a $2 ‘saving’ and then put $2 into a jar or a bank in order to actually save it? No.
Have you found a sale on last year’s car model? Perfect, go ahead and buy one. Choosing a lower priced item is rational and clearly the better option. But if you never put that discount money in the bank and leave it alone, then this bargain will not result in saving money. So while there is nothing wrong with stretching your spending, and in fact it helps you to live better, it simply has very little to do with saving.
Bargain hunting and coupon clipping also distract from saving money because saving ends up as a side-effect. You might say that, “If I find a discount then I will save some money”. In other words, saving is the result of some other action instead of something that you set out to do. But, more importantly, the focus on bargain hunting means that saving becomes a lower priority than spending. That is the common trap that prevents people from growing their wealth and improving their financial life. This book shows why people fall into the trap and why it’s so easy to avoid.
Why It Usually Goes Wrong
Save your money. Who said that? Was it your father, or an actor on a TV bank ad? It was both, but that’s not all. Your financial advisor said it, the head of the central bank said it and the wealthy barber said it. And the reason is clear and practical. You should do it because it’s good for you.
You always do what’s good for you. You only have one alcoholic beverage a day. You never smoke. You keep to the speed limit and drink lots of water. All because it’s good for you. Most importantly you don’t procrastinate. That’s the big one because it involves doing the things that you hate doing. Who wants to cut the grass or organize their desk? It’s a drag but you sacrifice the time and do it.
Of course nobody always does what is good for them. That’s mostly because there are no immediate consequences. It’s easy to put off doing chores and being disciplined if the results don’t appear until later.
Saving money, you are told, is in the same category as cutting the grass. You know you should do it, but it’s also a drag. So you procrastinate, putting it off until you feel like doing it which, of course, is never. It doesn’t help that saving is intensely discouraged because of the way it’s presented, as a chore or a duty, like flossing your teeth. You might eventually get around to it but it’s no joy. Or is it?
It’s easy to see that the joy in cutting grass is not in the doing, but in the result. You actually enjoy looking at it, and you might have one or two beers on the deck after it’s done. Organizing your desk goes the same way, and is even better. You may enjoy its appearance after it’s done and it makes your work day easier. There is less annoyance each time you need to find something. Eventually though, the grass and your desk revert to the mess they were in the first place, and you have to start all over again.
The news is that saving your money is different. Saving is fun. There it is, there is the Missing Link. You first need to change your mind about what saving money does for you, but it is fun. And not only will you enjoy it, but unlike the grass that grows back or the desk that gets messy again, saving is permanent and the enjoyment keeps growing. It’s easy to start, easy to keep it going, good for you, and fun. Hard to believe, and yet it’s true. Read on and see how it works.
3 Easy Pieces
How can saving money possibly be easy and enjoyable when everyone says it takes years of discipline? First, change your mind. Next, open a separate account for saving. Last, keep adding to it. Is that all there is? Yes, that’s basically it, although the first part is the hardest because we are all continuously trained to dislike saving. Changing your mind may also take a couple of steps, but in fact you already know what those are.
As much as your parents tell you to save, they never tell you why you will like it. You hear about the unavoidable pain of saving but never about the joy. You hear about making sacrifices to save, but not about the new choices that saving brings. You hear about the discipline required, but never about the relief from daily stress. Pain, sacrifice and discipline. Groan.
Even professional advocates of saving money turn you off. The banker in the TV ad says that the big banks are going to pinch you with excessive fees, but you can save a bit of money if you switch to his bank. The head of the central bank says that saving money will prevent national economic trouble. Financial planners say you will retire in poverty if you don’t save. Getting pinched? Economic trouble? Poverty? So much negativity naturally leads to a big turn off and it’s easy to see the effects. National savings levels are low, personal debt is high and people who advocate saving are somehow confused about why this happens.
The only thing that drives people is desire, so they simply ignore the sour message and instead turn toward their immediate wants. That would be shopping, dining or travel. Everyone wants love, security, a full belly and a full closet. A beautiful house or a major renovation would also be nice, along with a new car. Oh, and some new shoes. Saving money and new shoes don’t go together (at least according to scrimpers, budgeters and coupon clippers) so people will just ignore the saving for a while.
So if all the experts turn off the drive to save, couldn’t people simply encourage each other to do it? After all, people discuss real estate, cars and clothes all the time. It’s almost a social pastime in which they brag, compare notes or complain. Don’t they discuss their wages or salary in the same way? Sometimes they do, such as in unionized workplaces where all wage rates in a collective agreement are regularly published. But, in reality, talking about real estate is just a substitute for talking about salary because someone can get a pretty good idea of your household income from what you say about housing prices. So it turns out that people will strongly hint at their income even if they don’t discuss it openly. When it comes to saving though, things get strangely quiet.
For some reason saving money is the most private of all possible topics. Can you just imagine this in a casual chat: “Hey, Jim, how much do you have in the bank?” This practically never happens. Saved up money is totally invisible, and that makes saving as desirable as getting a dental filling. You usually avoid it, you feel better once you have it, but nobody else can tell whether you got one or not. Likewise, the usual privacy around saving money doesn’t bring any appeal to doing it. You may show people around your lovely home, but you will never get the chance to chat about your great success at saving money.
There is a list of good reasons to save. Save for a rainy day. Not bad, but not too inspiring is it? Save for something big. That means you should save in order to spend big and end up exactly where you started, with no spare money. Not too clever is it? Save for retirement. That one works too, but it tells you to spend like a miser during your younger life so that you can spend like a miser through your older life. Not so motivating is it? What all of these old reasons share is that they portray your financial life as dreary. The promise of being stuck in a world of low-spending boredom will never move anyone to change their ways.
Many factors push people away from saving money while the taboo around discussing it doesn’t help pull people toward it. And most strangely, all the players from parents to bankers to financial advisers keep on missing the obvious path to saving money: the desire to do it. Almost everyone says that they want to save more money, but throughout our lives the authorities have concentrated on the negative and the difficult view of saving. They have also ignored the reasons to desire it. More precisely, they have beaten the desire to save out of us. Once you change your mind about it though, saving money changes your life in some important ways that you may not have expected.
Is there really a better approach than to treat saving as a private nuisance? Of course there is. Just direct your mental focus away from saving money as a task. Do it now. Stop thinking of it as a chore. Because, in fact, saving money isn’t a chore. Certainly not a big one. It doesn’t require you to do anything more than put some money into the bank each time you get paid. The wealthy barber and the automatic millionaire have already explained this step clearly enough (even though they missed the most important link). If you think that’s too much to do then you are finished before you start, so don’t be that way. Stop it. Instead of dwelling on saving as a task, just take a minute to ponder the lovely money you have already saved. Then move on with your day.