Saving vs. Spending
The psychology of Saving vs. Spending is an interesting one, and it is something that many people struggle with.
It seems as though we consciously want to save money, but an inner urge wants us to spend.
We wanted to look deeper into what makes this happen and figure out why saving is so damn hard, and spending is so damn easy.
It’s happened to all of before, we are cruising along doing well and then a huge expense just happens. We were driving along happily one fine day, and as we came to a stop we heard the most gruesome grinding coming from the brakes.
AM and I looked at each other in shock and disgust.
There goes an entire month’s worth of savings.
These scenarios play out in our lives constantly, and for most of us, we can prepare for them, but it’s difficult to get ahead of them.
This creates a drain on our resources and hurts the accumulation of savings.
You don’t wake up expecting to break a limb, but it happens and now it’s an expense.
This dichotomy of saving vs. spending is one that we don’t have control over, but it is a must that we plan our lives around it.
Here are 10 examples that we should all plan for.
That Brand New Feeling
Why is it that new things make us feel so good?
That temporary burst of endorphins drives us to purchase things again and again and again, but once the endorphins wear off and the packaging is on it’s way to the dump, we go back to normal.
And we are that much poorer.
We love the excitement of new things, our friends love new things, and the media says we need new things. This is a concoction of emotions that push us to spend.
The advertisers know this. The big brands know this. We know this!
We spend anyway. Sometimes even on credit cards.
The fascination with having new things is another thing we must balance to protect our savings and protect our wealth.
Unplug from the maelstrom of ads and peer pressure, and take action to keep this mental breakdown at bay.
The best way to prioritize saving over spending in this situation is to put a cooling off period into every purchase you make. If you still want it 3-7 days later, it was meant to be.
We promise you it almost never is.
Spending, like we said before, makes us feel good. NOW! Saving doesn’t have the same effect. Saving is a gradual process that does feel good, but it isn’t instant.
You have goals and future needs, but the account never seems to grow fast enough, and the interest rate isn’t high enough.
To apply this principle to investing, the market goes down and you cry yourself to sleep as your savings disappears.
Ok, it isn’t that dramatic, but you get the point.
Saving is a gradual feel good.
Spending on the other hand means that you get to take something home.
With spending you get to CONSUME.
This makes us all feel good, and it allows us to tell our conscious saving mind to go away for a while. Just let me have this one thing, just this once.
Materialism ultimately doesn’t feel good though.
That instant gratification makes consumerism possible, it also drives us to do things we aren’t necessarily prepared to do.
You can fix this problem too. Plan your days to not include shopping, and when you do shop, stick to the list!
More Tips To Help You to Save
Set up an automatic withdrawal on payday into your savings account and increase this amount for every raise.
Increase the percentage of income that goes into your 401(k).
Make goals that are obtainable and goals that are a long way off, by having tiers you can hit the short term ones for a boost of feel good on the way to the bigger goals.
Fill your time with something other than shopping, online or otherwise.
Don’t try to keep up with your friends spending habits or their new stuff.
Teach Your Kids About Spending and Saving
We can look back at our financial educations and literally count on one hand how many times we were taught budgeting or financial principles in school.
Don’t let your kids neglect one of the fundamental pillars of our lives.
You teach them to be healthy, manners, to be respectful, but yet we forget to teach them how to save.
Or even worse, we buy them everything they could ever want or need.
Catching the spending bug early and showing them a better way will make their lives much easier and full.
Stop showing your kids love by buying them things.
We promise that this spending is hurting your saving and your kids are learning bad habits from it as well.
Teach your kids the value of money, make them understand the difference between a need and a want.
Once they can grasp that part of the equation, teach them to save and set their own goals.
Let them earn the things you give them or the allowance you set aside from them.
We love our children so dearly and don’t want them to have any hardships in life, but if you send them into the world without a financial education, they will suffer as much as we have or more.
Tips For The Little Ones
Start very early with their financial education, kids will start to understand at a very young age!
Make their daily routines involve earning money or things. Help them to understand the value of work and where the money comes from.
Show them how to budget and to set aside funds for different purposes.
Talk to them about why we save and why we buy things, make the conversation fun.
Teach them that Saving vs. Spending is a battle that can be won.
Do real life outdoorsy type stuff with your kids, it’s free!
Cut Spending On The Needs
We are not huge proponents of being frugal to the point of pain, so to make room for a little wasteful spending we have to cut back in other areas.
Not only will this free up funds for the bad stuff, it will allow you to save more as well.
The best way to win the battle of saving vs. spending is to be consistent and create good habits that automatically help you spend less.
We are creatures of habit and creating new habits will help you to make better decisions.
Imagine if you could go an entire week without spending a dollar, how would you go about accomplishing this? This kind of habit forming exercise will create new ways of looking at your finances.
Try new ways of cutting your monthly bills, like cheaper phone plans, higher/lower thermostats, and using more efficient appliances and light bulbs.
Use less and save more, we always say.
Giving To Others
Another way our mind rejoices is in the process of giving. Have you ever wondered why it feels so good to give gifts or give to charity? Our brains love helping others and making them feel good.
It’s a euphoric feeling almost as good as spending.
We even propose that the feeling will last longer with giving than with spending.
Try not to think of giving as spending, though. While you are going to budget for it, giving is on a different end of the spectrum from spending on ourselves.
We also suggest that what you give not be frivolous or feed the consumerism culture itself.
Put thought into your giving, research the charities you give to, make the giving feel even better by knowing where your dollars go.
When it comes to gifting, give from the heart, and make sure they know that your gift comes from thoughtfulness and not just a big bank account.
It Takes Effort
Ultimately, spending will always be easier, but saving will always be more rewarding in the long term.
Hopefully, we have given you a guide to the battle between saving vs. spending that will enable you to win the fight within your own mind.
We know it’s damn difficult to not eat out or not buy something when you have the money. Our brains literally fight us every step of the way.
Plan ahead. Create new habits. Avoid putting yourself where the spending can happen.
Let us know what you think causes the battle of saving vs. spending to rage in our minds and what you have done to win the battle. We would love to hear from you!