If You’re Spending, You Aren’t Saving


14 April,2014

It seems pretty obvious: If you’re spending money, you aren’t actually saving anything. However, we hear talk, all the time, of how someone “saved money” by getting a great deal on something. Even though it seems like saving is happening in this case, the reality is that it’s actually spending.

It’s just spending less.

While it might seem like quibbling to talk about the difference between saving money and spending less money, it is an important distinction — especially if you are trying to save for a better future.

Spending Less

Of course, at some point you have to spend money. Money is necessary to buy many of the things that we need. From food to shelter, money helps us survive. If you are in a financial bind, the idea is to spend less so that you have the money to cover your expenses. If you can spend less on the things that you had planned to buy anyway, you can improve your financial situation. Or at least stay within your budget.

The story is a little different when you spend less on things that you don’t actually need. While this isn’t a problem if you can afford it, it’s important not to fall into the trap of thinking that you are “saving” money when you get a good deal on something completely unnecessary. Spending money just to get a bargain — even though you don’t actually need whatever it is you’re spending money on — is still spending money. And it’s spending on something that might not advance your financial goals or help you survive in any way.

Saving More

If you really want to boost your financial situation, you need to actually save more. By saving, I mean that you need to actually set that money aside. You can put the money in a high-yield savings account, or you can invest it in a tax-advantaged account.

When you are saving, you are making an effort to put that money to work for you. It’s not just a matter of spending less. If you spend less and then take the excess and set it aside, then you are saving money. It’s important to make that distinction.

Change the way you talk about spending and saving so that your actions will adjust to fit a better financial future. Part of successful finances is mindset. If your mindset is such that you are “saving” when you spend less, it’s easy to justify making more purchases that you don’t need. You tell yourself that you are “saving” — even though you are doing no such thing.

Make a point to apply the word “saving” only to your efforts to sock money away for the future, and your outlook will change. Instead, you be more likely to examine your purchases, and change the way you handle money. Be very careful about the words you apply to your financial habits. Start truly saving money, and you’ll find yourself developing better habits, spending less on unimportant things, and preparing for a more successful financial future.