5 Foundations of Personal Finance, #3: True Savings

There seems to be a common misunderstanding about saving money. In our consumer society, saving has come to mean spending less, as in “this shirt was on sale so I saved $10.”

There is only a one-letter difference between sale and save, but they are not the same.

As the economy falters, we’re encouraged to spend more and consume to keep things going and support the GDP. Recent news coverage lamented that the savings rate increase to 3.6 percent in December caused the economy to suffer.

Does anyone else think it is odd that really saving money has become a bad thing?

The article went on to say, “On average, Americans have saved about 7 percent of their disposable income since 1929, but that figure dropped to virtually nothing several years ago.”

Let’s think about the basic definitions:

  • consume: (verb) use up
  • save: (verb) set aside for the future

It has been only recently that easy credit transformed our economy into one that relies so heavily on consuming rather than production. Constant borrowing and spending without saving is not healthy.

Did Benjamin Franklin say, “A penny borrowed is a penny earned?” Perhaps I’m too traditional, but I’ll stick with the timeless advice.

(In case there is any misunderstanding, I am not advocating saving with no spending. Like Meredith recently shared when she got a new roof, if you’ve been saving and now have money available, it’s a great time to provide other people with work opportunities.)

Practical Advice to Put the “Saving” Back Into Saving Money

  1. Have a percentage of your paycheck directly deposited into savings, so you won’t miss it.
  2. Keep some of your savings in an account that is quickly and easily accessible for emergencies, even if the interest rate is low.
  3. Ladder your CDs (certificates of deposit). CDs pay a higher interest rate than savings accounts, but they lock up your money in the meantime. Rather than having one big CD that you have to wait for, have several smaller CDs that will mature at different times during the year. When a CD matures, you can either renew it or access the funds if you need them.
  4. Take advantage of employer matching for your retirement account.
  5. Save for “whatever.” You can’t predict the future, but you can expect to have future expenses. Whatever they will be, you’ll be glad you started saving ahead of time.

Saving money seems to be easier for some people than others.

About Rachel

I write about practical tips that will help you simplify at home. Connect with me on Pinterest and Twitter.


  1. One thing to mention when saving is that you don’t have to save very much at a time, just do it consistently. I have friends who don’t regularly save because they say they don’t have enough to do so. I have other friends who save every chance they get, even if it is only $5 or $10. It all adds up over time. Me? I save every paycheck, automatically. I don’t even see it so I don’t think about it.

  2. I’ve always been a natural saver, but over the years I became lazy. I’ve only recently become more aggressive about it.

    I’ve been “lucky” that I don’t think if something costs little, it’s a deal. If you don’t buy it, you’ve saved even more! That said, I prefer quality over quantity: I prefer to buy one super stylish shirt at an expensive boutique, than five semi-cute ones at Target. Because if that super-cute shirt boosts my confidence and makes me feel good, then it was a DEAL.

    Kirwin´s last blog post..I refuse to be vanilla

  3. I agree with what Gay said about not having to put a large amount into saving regularly,at least not to start with, but just being consistent. It needs to become a habit.

    My mom works at a credit union and one thing they tell people who don’t save anything is to put the last 3 digits of their paycheck in savings each time they get paid.

    For example: Paycheck is $398.45, so $8.45 would be deposited into savings. This may seem a little strange but the whole point is to get them into the habit of putting something back on a regular basis.

    One other good thing to do, once you are accustomed to regularly saving is, each time you get a raise, increase the amount that is going into savings. After all, you were not used to having that money at your disposal to start with.

    Amanda @ Mommy’s Idea Book´s last blog post..No! Because I said so…

  4. I agree with Jessica. I can’t say that I am a natural saver but I can easily pass up a sale.

    We are following Dave Ramsey’s plan. We have our initial emergency fund but will not save more until debt is paid off.

  5. Rachel, have you read the book Deep Economy? I just finished it (and loved it!), and I think you would find the stories and statistics in it fascinating.

    • Thanks Sally, I’ll look for it next time I’m at the bookstore.

      • Instead of buying it at the bookstore, get it from your local library–and if they don’t have it, ask them to get it for you from another library. Test-driving books from the library before you decide they are worthy of purchase is a great way to save money. Plus, the librarians really do want to go the extra mile–we don’t become librarians to shush you! Really!

  6. Rachel,

    Great post. I’m enjoying this series. Today’s post really hit me. I can be so tempted by the SALE sign and CLEARANCE. If I’m looking for something specific that I need, that can be great, but 9 times out of ten it’s just a want.

  7. I desperately desire to be a debt free person and hubby and I are striving towards this goal. We are also trying to be consistent savers which is difficult due to owning a small business. We do not always have $$ coming in. So… We are a work in progress!!

    Kelli´s last blog post..This & That

  8. I would have loved to do your poll but I don’t really fall into either category.

    For a while now I’ve been trying to make do with what I have as much as possible and only shop for necessities. It’s not been too difficult to do when you stay away from the stores! I think many people waste and piddle away their money and never think they can save because they are justifying themselves with those little expenses every day.

    I had not been a saver most of my life due to living on a lower income and finding it hard to make ends meet. However, I’m learning more and more that you just have to make it happen. So now I continually put a little aside each pay day. Sometimes it’s easy to think that $5 put away doesn’t matter, but $5 NOT put away does matter.

    The key for me has been staying out of stores/not spending and putting even small amounts aside. If I can do this on our lower-than-average income and still remain home full-time due to health, just about anyone can. The challenge though – one’s got to be willing to sacrifice stuff and extras for what they really want. I’m not rich in money but I am rich in time!

  9. I’ve been writing about this on my blog recently. I definitely think the term “save” is tossed around too loosely. It’s great to save money (in the “spending less than you planned on” terms) while shopping, but if that money just quickly gets spent elsewhere, it’s not necessarily saving.

    Alison@This Wasn’t In The Plan´s last blog post..I Saved 35% at the Grocery Store!

  10. I’m not really a natural saver. Thankfully my husband is! I’m also not one to just blow money because something is a “good buy”, but I definitely like to buy nicer things when I do buy.

    Marianna´s last blog post..Five Books

  11. I am working on buying less, mainly to prevent new clutter being added to the already considerable existing clutter, but saving money is an extra bonus :)

    chaotic kitten´s last blog post..Bringing Things In

  12. I like this topic – thanks for posting on it. I tend to be more of a saver rather than a spender, but also agree with one of the commenters that I’d rather have one nice thing that costs a bit more than 10 so-so things that I got on sale. I’ve found this especially to be true regarding garage sales or thrift stores. Over time, I’ve found that many of the “bargains” I’ve gotten there have ended up being donated back to the same thrift store later because I never wear them! I also find that there’s a hidden cost to discount or second hand stores, in that you have to sift through a lot to find a piece that truly suits you, fits well, and is in good condition. I’d rather save my money and buy something nicer, and try to wait for a sale at the place I’m hoping to shop at.

    Life from the Roof´s last blog post..Good Friday – Pt. 2