6 Excuses to Postpone Savings
The following is an excerpt from The Truth Project: Finding the Courage to Ignore Wall Street by Wayne von Borstel.
Financial success has zero percent correlation to how much a person earns; it has one hundred percent correlation to how much a person saves. Following are six excuses I often hear from people for not saving.
- I don’t make enough money. People say they would save more if they earned more. While they may actually believe that, in my experience big earners tend to reach their goals less often than those who make less because they do not take saving as seriously. Those who make a lot of money must save a lot in order to preserve their lifestyle in later years. It is easy for them to make money, so they believe they can always make more. Often they have less discipline when it comes to spending and less urgency when it comes to saving.
- I have enough for retirement. Many people don’t have any idea how much they will need in retirement to maintain their current lifestyles. Some say they already have enough for retirement. Enough what? If they don’t even know what they will need, and have not measured the statistical probability of accumulating sufficient money for retirement, how do they know they have enough?
- I will start saving when I’m older. The way financial marketers try to generate excitement about investing during the critical years just before retirement, or during what is known as the retirement red zone, is both laughable and disingenuous. While it is never too late to save for retirement, waiting until five years before retirement to start planning with the hope that you can accumulate enough money to last the rest of your life is a terribly misleading strategy. People need to start saving as early as possible, and Wall Street firms need to help young adults measure and cultivate what they will need for retirement. Money in retirement means choices. And, while money cannot make you happy, lack of money will make you unhappy.
- I need to pay off my debt first. When I entered the financial services industry three decades ago, I was instructed to help people pay off their debt and build an emergency fund so they could begin to invest. However, for most people, if they waited until they were debt-free to start investing they never started. Once they paid off their debt, the first thing most of them did was to create more debt. Unfortunately, the average person feels comfortable living with debt. Even when they eliminate their debt and save $10,000- $15,000 they start thinking about buying things they really don’t need…again! They are addicted to debt.
- I can earn more by investing my money than saving it. For many investors, the concept of putting money into an emergency fund or savings account that earns little or no interest makes no sense. Young people are particularly impatient when it comes to lazy dollars. If money they set aside doesn’t grow quickly, they often lose interest, ignoring the long-term benefits of saving. However, an emergency fund and savings account allow you to invest the rest of your money without concerns about restrictions or penalties. While it is often difficult for investors to get their minds around the concept, once they understand how lazy dollars in an emergency fund and savings account help hold the pieces of their financial plan together, it all makes sense.
- I can live on less once I retire, so I really won’t need to save much money. People kid themselves about retirement, about how much they will need to maintain the lifestyle they have grown accustomed to. However, more than likely they can’t keep up with their debt right now, much less after they stop working. They believe it will all work out…somehow. And if doesn’t, well, they can live on half of what they spend now. Or, at least, that’s what they tell themselves. Unfortunately, it doesn’t work that way. Those who are moneyholics during their working years will still be moneyholics after they retire. They need to cure their spending addictions now. They need to plan and to save.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
