Tuesday, September 27, 2011

Hard Work

Saving is hard work. If you’re a generous person, it feels selfish to save. If you’re a shopper it feels wasteful to save. If you’re barely making ends meet, saving feels like a rumor, like Bigfoot or the Loch Ness monster. The truth is, saving is difficult and it never really gets any easier. Still, it is necessary.

Savings serves as a barrier between you and debt. Debt occurs when we encounter real or perceived emergencies, or when we encounter sales on things we “can’t live without”. You can establish emergency savings and you can save for things that you want or need. The second is always the hardest for me to be honest. Our culture is biased toward the “if you want it, get it” mindset. It’s so easy to get credit still that it feels stupid to not take it. They’re giving you 10% to 20% off of your purchase or 5% cash back, so that’s savings right? No. And I think deep down we know that, but we try to convince ourselves otherwise. On average, we spend 23% more with plastic than we do with cash. So even if you’re the kind of person that pays off your credit cards every month, you’re still incurring more expense than you would otherwise, which is the opposite of saving.

You and I are worth the effort it takes to establish and maintain a healthy saving strategy. Whether you operate by the 10-10-80 plan or some other method, figure out a way to start saving if you haven’t done it before, and then resolve to be consistent. Establish some goals. It’s totally fine to want a new couch or the iPhone 5, just save for them and buy them when you can afford it. It feels so much better to pay for something and have no payments following me home. We bought a dining room set several years ago on credit, and when the table got scratched a few months later I was bothered by having to pay for something that was no longer new or as nice as the day I got it. With payments you can experience buyer’s remorse on a monthly basis. Why subject yourself to that? When your car dies or needs work, it’s already a difficult situation, why prolong it over several months or years with payments. With an emergency fund you just fix it and go on.

Start now. It's not too late to get on the right track.
~Kevin