It’s Not How Much You Make
The more you make, the more you’re likely to save… true or false?
I’ve worked with people who make bag-loads of money and can’t save a cent. I’ve worked with people who have a modest income and find a way to put aside a little sumthin’ sumthin’ for the future. Savings, it turns out, isn’t about how much money you make; it’s about how much money you keep.
In 2012, Canada has a sad and pathetic savings rate of… wait for it… 3.3%. Yup, as a nation we’re setting aside a whopping 3% of our income. And the projections for 2013 is for that rate to go DOWN. Not only are we behind countries like Norway, Germany, France, and Australia, but we’ve even fallen behind the U.S. in terms of how much money we’re willing to Not Spend so we can have some for later.
While the idea that savings requires that you not spend has been a truth since Dickens was a lad, people still seem to miss the obviousness of this truth. As Chuck wrote in David Copperfield:
“Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
So why is this truth still eluding so many people? Why do folks continue to hold on to the idea that if they just made more money, THEN they could save.
Could it be that people are so unconscious about how they’re using their money that they’re missing the things that seem so obvious to the frugally minded? Could even small changes mean money in the bank?
If you’ve got money stashed away in a run-of-the-mill bank account and you’re paying fees or earning a pittance in interest, you’ve passing up on money you could be saving. Wipe out that $19.99 in chequing fees and up your savings return from 0.25% to 1.5% and you’re well on your way.
Taxing yourself for your small indulgences is another nifty way to not only become conscious of your spending, but to build savings. If you spend $1.65 on coffee at the drive-thru, then add $1.65 to your savings tin.
Swap what you can do for something someone else can do and save the money you would have spent. Like pulling weeds? Swap your gardening skills for a oil change and put the money you would have spent into your savings.
It is small changes that lead to big savings. If you’re waiting for the right time to save, it’ll never come. You’ve got to make it be the right time. Today! And you have to insert the discipline and commitment required to track your spending, set aside a pre-determined amount, and live within your means. But you KNOW that, right? So what are you going to DO about it?