I keep hearing people use the term "I saved money" when they refer to buying something for less than the price ticket states.
Let us mull over these words "I saved money". Did you? Did you really save money? Well, OK then, show me. Show me all the money you have saved over the months and the years. It would be wonderful if there was someone out there who had this stash of cash, but my guess is that no one does.
And so, is that money really saved? No. It's just money not spent, on that purchase, at that time. So, today I'd like us to think about the words we use, what they really mean and how we can make that phrase "I saved money" a reality.
How can we do this?
Well, how about every time you save money, by not paying the full price for something, you put the difference aside into an account. And while you're at it, why not think about what you're saving money for, and allocate it, mentally, for that purpose?
You see, the one thing that everyone says who has had the money and financial light bulb go on is that they wish they'd saved, or saved more, throughout their lives.
Saving money is the single biggest favour you can do for yourself - assuming you have dealt with any debt issues.
But it's far from easy. Saving money requires your commitment and hard work.
So how can we make it easier for ourselves and cut down on anything getting in the way of it going into that pot?
Well, one way of doing this is to have a percentage of your income go straight into your savings account, so that it never really hits your spending account. Setting this up as an automatic process saves you from having to remember or being tempted into using it.
People are full of great ideas, and that's why I set up my financial platform, so that we can share and learn from each other. Have you, or anyone you know, come up with a great way of saving money? Please share.
Here's something I found interesting:
One woman saved every penny she got by way of a raise. Her philosophy was that she had survived on her initial salary, and so the extra she was entitled to could simply be lobbed away for her future.
She lived in Kuwait for years and has since retired to Canada where she owns her own property and lives a very comfortable life, not wanting for anything, able to travel at will, and indulge in various pastimes.
Now, I'm not too sure we'd all survive comfortably on our initial working salaries when we have children, obligations, school fees and so on to contend with, but think about this and use the premise of it to come up with a system that works for you.
It could be that you live on your base salary for as long as you can, and then give yourself an increase to a level that deals with inflation, any extra obligations and so on, as you go along, always keeping in mind that your raises and bonuses are an added benefit, to be used wisely, preferably put aside for a future purchase.
This could be towards a home, your pension, or a beautiful work of art. Saving money isn't just about the future and big heavy-duty expenses or obligations that make up our lives. We all need to have a treat now and again, and so, of course you can have that comfy couch, spiffing suit or bling ring. But how about saving for it instead of splurging and making up the payments later?
Going back to where we started, and the receipt that says you saved X. You could argue that you only bought that latest big purchase precisely because it was on sale. I get that. But how about saving for it, so that it's a premeditated purchase, then waiting for the sale and not pocketing the difference, but putting it in your savings account for the next big purchase.
And while you're at it, think about this: you only really save money when you can afford to pay for something, but choose not to buy it. Being able to afford a certain thing isn't an invitation to buy it. If you don't need it, keep your money.
I believe looking at our seemingly mundane daily behaviours and spending patterns is an essential starting point towards changing our behaviour with money. You see, the simple, daily things can have the biggest effect.
I know of a father who was forever buying gifts for his child - little knick-knacks. I kept hearing "it only costs Y". And so I invited him to start a savings account for the child, to put an equivalent amount of money - the same cost of the gift - in that account as he went along. The father soon realised how it all adds up, because it did; it was staring back at him in the account. I'm happy to say that he doesn't spend anywhere near what he used to on those throwaway trinkets.
Adverts that tempt you to spend by this familiar exhortation: the more you buy, the more you save are totally misleading. The more you buy, the more you spend. Your bank balance can tell you that.
So remember, just because the bottom of the receipt tells you that you saved X amount of money, it doesn't make it real. The only thing that will make it real is you putting that hard cash - that saving - into an account. Give the account a name, call it whatever it is you're saving for, then leave it alone, until it's time to spend on that special thing.
Then truly enjoy the fruits of your discipline and resolve.
Nima Abu Wardeh is the founder of the personal finance website www.cashy.me. You can contact her at nima@cashy.me
