Justified Spending And Saving

by Adam on May 23, 2012

If you’re struggling to find money to put away for the future, or want to increase the amount you are saving you should ask yourself these questions:

  • Are you not saving much because you are telling yourself that today is more important than tomorrow?
  • Do you think you’ll be earning more in the future so you don’t or can’t save as much now?
  • Do you find yourself thinking “what’s the point in saving?” as we all could get hit by a bus tomorrow?

How we justify our spending

We all have reasons for spending money. Firstly we need money to simply live: a roof over our heads and food in our bodies. If you can’t afford these basic needs, you immediately have to search for a solution, like cash loans online or borrowing from friends or relatives.

So, of course, it’s important you cover your basis needs. But once we’ve got our needs covered we then move onto our wants and come up with justifications internally for why we’re buying this or spending that.

For example,  I spend quite a lot, compared with some of my friends, on travel.

In fact, my recent spending on travel might not be sustainable, considering I’ve already had two major holidays in 2012 already!!

I tell myself that it will be enjoyable; broaden my horizons; and leave me with priceless memories I’ll have for years to come. Whether I’m right to spend that money on travel is not the point I’m highlighting, but rather, it’s that I already spent that money and have justified it to myself to feel better about the decision.

We all are wired differently so if you find you’re always left with no money at the end of the month, it’s definitely worth having a think about what justifications you use to explain your spending –give yourself a few minutes to think about the “why” and perhaps you’ll find a better way to maximise the value you get from your spending decisions.

Justifying saving for tomorrow

Of course, money is ultimately to be spent –it is merely stored ‘value’ that we are redeeming from the past for today, but, just as we all have justifications for our spending, we also justify to ourselves why we are saving at the level we are. Let’s look at those three reason people might give for not saving more today:

1) Are you not saving much because you are telling yourself that today is more important than tomorrow?

Is today really more important than tomorrow? Whilst today is right in front of us, we very quickly become our future selves, and regardless of what you might be hoping, our future self might not have it all figured out. In fact, they are relying on us to set the foundation so they can live their best life, free from debt obligations or the need for endless overtime to make ends meet.

Of course, you don’t want your future self becoming resentful of missed experiences so don’t over-save but equally spare a thought for the person you will soon become and don’t let them down, OK?

2) Do you think you’ll be earning more in the future so you don’t or can’t save as much now?

If you’re in your 20s it’s likely you’re not earning a great amount. By the time you’ve paid your rent, bought a few necessities and made a payment on a student loan or other debt acquired in early adulthood, you might just have a small amount left for fun (if you’re lucky!). It’s tempting to think that you’re just one pay-increase away from being comfortable or that you’ll start saving when you’re a certain age because you’ll have more money in the future.

But the magical thing about the human brain is that we’re always just one step away from where we want to be. Getting started now is a really powerful step to take because once you start you can begin gaining momentum and take the first steps towards your goals. The very fact that you’ve made a start makes it easier to continue. I can highly recommend it for the comfort it brings too –to know that I’ve got savings put aside for my future is a great thought that makes me feel more secure about the future. I know I’m not going to be that guy, who aged 40, who realises he has nothing put away for the future and ends up panicking that he’s never going to be financially free.

Remember this: If you’re in your 20s, getting started is more important than the actual amount you start putting away (if you’re older than yes the amount you need to save does matter a little bit more but getting started remains the most critical move).

3) Do you find yourself thinking what’s the point in saving as we all could get hit by a bus tomorrow?

This is going to be my favourite myth to bust because I can reveal to you that this is very unlikely. If it was likely  then the streets on your way to work this morning would have been covered in blood and guts!

Yes, people die prematurely all the time but you can’t base a financial plan on it! And even the whole premise, that it is wasted money if you’ve saved and then die before you’ve spent it, is flawed.

Is it really that bad to die with money in the bank?

Dying with money in the bank means you’ve left the world with ‘stored value’ that can be harnessed in so many useful ways now that you don’t need it. You could have the money do some powerful good for a charity, or it could simply be used to help your family move on with their lives when you’re gone.

Why I’m Saving

  • I’m saving for a future more important and significant than today but not so much as to make my future self resentful of missed opportunities.
  • I’m saving for a future because getting started is more important than the amount I can afford to put away.
  • I’m saving for a future even if that future has me dead under a bus, as my humble savings will be able to have an powerful impact beyond the grave.

So why are you saving and could you be saving more?

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