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
- Have a percentage of your paycheck directly deposited into savings, so you won’t miss it.
- Keep some of your savings in an account that is quickly and easily accessible for emergencies, even if the interest rate is low.
- 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.
- Take advantage of employer matching for your retirement account.
- 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.