saving money

Rewind to three years ago. My husband and I had paid off the last of our combined $59,496 in debt a year before that (September 2010, to be exact, less than 5 months after getting married). The celebration was particularly sweet, because thanks to the Iceland Volcano Eruption, our honeymoon to Austria was put on hold…so by the time we could go in late 2010 we were consumer and student-loan debt free!

Those were good times.

The Financial Doldrums

Something changed after we had met all of our goals. We got back from Austria feeling just amazing. And then, we entered this sort of financial doldrums period. We didn't know what we wanted to save for next. And we stayed in this savings-rut for at least a good year.

My conclusion was that it was a bad thing to save money with no purpose at all. Probably because it felt kind of “meh” while we were there. It's not like we were saving for something specific + sexy anymore. We were just saving for saving's sake.

How could I not know what I wanted to save up for? Wasn't there a trip I wanted to take, or something I was supposed to do with all of this money we were fortunate enough to set aside?

I even wrote a post about it that I never actually published, just needing to put into words the floundering going on in my head at the time.

But I now have a completely different outlook on saving money with no specific purpose: it has a very specific purpose indeed.

And it only came out to smack me over the head while reading someone else's question on Facebook the other day.

Saving Money Always has a Purpose

A woman had started an automatic savings plan (you go, girl!). But she was struggling with something. Specifically, she was struggling with wanting to put money into savings that she will never spend. She wanted to know if others had a pot of money they would never spend, and how they felt about contributing to it. In her mind, it was simply to pass on money to the next generation, and that didn't rub her the right way. She wanted to know if others bought into having a pot of money they will never spend, and what their thinking was around it.

Her question spoke to me, and I responded to her within a minute of reading it.

Here's my response:

“I actually have a totally different outlook on savings that you will never spend. What it buys is not tangible. It buys you confidence in decisions because you have a plan B, leaps of faith should you want to take them, security, and being able to base decisions on things not having to do with money. Those are very worth it in my book!”

That answer was based on our own experiences and advantages – gained by having a pot of money that we will never spend – that look something like this:

Pretty amazing, right? Do you think we would have had it so “lucky” if we hadn't had a pot of money waiting to catch us should we fall? Nah. I'm sure we would not have taken those leaps of faith, and that stint of unemployment would have felt like an episode on Shark Week instead of a mini-retirement tryout.

Sometimes, it Sucks to Save Money

I'll be the first to admit that sometimes pushing “submit” to send money from checking into savings can suck at times. A few weeks ago I was about to send an awesome $500 from our checking account to savings…and I hesitated. Yes, that money was still ours no matter which account I put it in. Yes, I love to see our savings grow. But sometimes it can feel like you're losing that money (especially when you treat your savings account like a black hole, like we do).

The fact is, if you're putting money into your permanent savings, then you're essentially saying “I'm not going to spend this money for the foreseeable future…or ever”, and so it can feel like it's gone.

But you need to change your thinking on this. Saving money always has a purpose, even if it's not quite defined yet.

If you've got a pot of money that you won't be touching anytime soon, then perhaps it is time for you and your family to take a leap of faith or enjoy some of the other non-tangible benefits of it. Let me know how you are doing just that in the comments below!

3 replies
  1. Syed
    Syed says:

    Wonderful post. I’ve had an automatic savings plan set up for a few years now and sometimes I feel the same. When I see how much money is in those accounts, I wonder if it could be better used paying off my student loans even faster, investing a little more or just taking a nice weekend vacation.

    But you’re absolutely right that money buys peace of mind and the ability to take some risks you wouldn’t have done otherwise.

    Reply
  2. Steve
    Steve says:

    Hi Amanda,

    I’ve just found this on google, although an old post is still relevant.

    14 years ago my wife and I did not have any money spare, everything was on credit cards, overdraft and mortgage. We were earning a low wage, had a small child on the way and had just purchased our first property. We were happy, but struggling, although we saw that as just a way everyone lives.

    Thankfully as time went on we sold our cars that we had loans for, paid off the loans, bought cheap ones, focused on paying off our credit cards and as time went on earned a better wage.
    We continued to focus on paying off our debts / loans. Now some years later we have paid over 50% of our mortgage and are still overpaying each month as long as we are in a position to do so. All of our credit cards and loans are clear and we have a savings pot that we are building on, everything that is ours is ours (well apart from that other 50% of the bricks! But we are making nice progress).

    But I often wonder the same, what is the point of saving and saving IF you are never going to use it?

    One member of our extended family is now in her 90’s, and she has a large sum of money that she has never touched and never wants to touch. You hear of people like this often, and I do feel that she will never get any benefit or use out of it in her life time. There are things she could do to her property to improve her living, go on holiday etc, but she does not. It got me thinking about our savings. Whilst we are still in our working life and still have a mortgage / household bills to pay the money makes sense as it provides a sense of security and artificial freedom (it is nice to look around occasionally and think, ‘I could afford that’ expensive item but still not buy it).

    But then I always find that there is a certain amount I want to treat as ‘zero’ and not go below, and that is always a moving target it would seem. It dawned on me that even if we were in financial trouble in the future, I would do everything I could NOT to spend or sacrifice the savings pot and see that number reduce.

    Saving for the next generation is a valid excuse / reason, but then, I hope to leave our estate to our daughter and we are already saving to help give her a little head start too.

    So I guess where does that leave us? With a pot of growing money in the bank that we do not want to touch ‘just in case’?

    It is true in years gone by that I have had moments of madness, I’ve bought myself a new motorbike, randomly splashed out on a holiday after I was taken ill in hospital and came out a few days later, bought the wife a motorbike etc etc. And we enjoy those things, but I always felt guilty about the money and always thinking ‘if I hadn’t of spent that now I would have this much’ (something I have tried to get away from as it used to drive me insane regretting what I had spent and looking at what I could have had). And although those purchases might seem like big things, I still found myself wanting to limit the hit on the savings. IE instead of buying myself that £12k motorbike I wanted I went and bought a 2k motorbike and spent another 2k doing it up. Instead of buying the wife the top of the range, we opted for something a little more simple and modest at half the price. That trip to NewYork was for 1 week instead of two, etc etc.

    And sure enough, after spending on such random unplanned things when it’s time to hand the cash over I spend weeks thinking I shouldn’t have spent it and what if, and now that I have to play catch up.

    It does seem to me that sometimes, savings are as much of a curse as a cure to anything.

    I guess for me I never, ever had any savings. We simply had too many bills and debts and did not earn enough money. Spending 120% of what I eared and living in debt was seen as ‘normal’ to me a decade ago, everyone does it right? Then when the time came and we knuckled down, cut spending even more, and luckily started to earn more money each year (this was also a big factor), we started to get ahead of the game a bit. When I first started to save money it was so satisfying, even little amounts seemed like a huge victory for me. But after several years of ploughing money away, sometimes as much as 1,000 per month, now it seems mostly to just be an imaginary number on a screen that will sit in a banking organisations system indefinitely.

    I can only guess that my future self may thank us for doing this though at some point, although I really hope it won’t come to that and be needed!

    So, what to do with it, what is the point of it?

    I’m still somewhat confused myself, but I can say the following:

    – It gives you a sense of freedom you wouldn’t have if you didn’t have it
    – If you do go over budget one or two months you aren’t worrying that it will bankrupt you
    – It will provide you with a safety net if things take a turn for the worse in your or your partners work
    – It will allow you to occasionally ‘splash out’
    – It helps in times of emergency (that leaking roof in a thunderstorm, the car breaking down etc that have not been budgeted for).

    The downside is the guilt of spending it, the not wanting to spend it, the ‘how much do I really need?’, and the addiction of trying to save it!

    Reply

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