Here’s a classic line that I’ve heard from my wife more times than not. “Bed Bath and Beyond is having a sale today. As long as you spend $250 you can save over $100 on products that would normally cost more money.” You’ve heard that line or some variation of it before right? It’s something that’s bothered me every single time I hear it. It’s something that the retail (really any) industry has had over the majority of us since we’ve been children. The term “saving money” has been a distortion of American culture for well over 100 years, if not longer than that.
In order to entice shoppers into buying products, companies have been offering reduced prices since before any of us can remember. They’ve led us to believe that “saving money” merely means spending less on certain things. Or that it means “getting more value” for your dollar. Have you ever gone into a bank that’s offering a promotion for opening up a checking account? Have you ever been offered $100 just for signing up to something? How about the infamous “Buy one get one free!” moniker? I’m here to put all this stuff to bed right here and right now. Whenever you buy something you are never saving money. You are spending money. It’s that simple.
The illusion that you’re saving anything is exactly what a retailer wants you to believe when in reality you’re going out of that store with less money than you had before. By that very definition you are losing money. Just because you paid less for additional items doesn’t mean you didn’t spend. I can assure you that if more Americans got this concept there would be plenty less debt out there. In order to get a better sense of this and to get you on the right track to actually saving your money, let’s take a look at the definition of saving.
Saving as defined in the dictionary means to “keep and store up (something, especially money) for future use.” At it’s core the act of saving is keeping something. Notice at no point in the definition does it imply spending anything. Nor does it imply giving anything up. It’s the complete opposite. So whenever a store or promotional piece tells you that you’ll be saving money, remember this fact. You may be spending less money than you normally would but you’re not saving anything.
If you’re saving money then you are bringing in more money than you spend. Plain and simple. Any time that you have less money at the end of the month than you did in the previous month you’ve lost money. Any time you have more money than the previous month, you’ve saved money. Don’t try to make it complicated. Don’t try and justify spending anything. Just look at the numbers right in front of your face. If the money isn’t in your favor at the end of the month, make the necessary changes so that’s not the case.
Paying too much on your mortgage? Downsize. Have a cable bill that can be reduced by $50? Reduce it, so long as that crucial number at the end of the month is in your favor. As for what you do with that excess money? Well there’s a multi-trillion dollar industry out there trying to sell you on what to do with it. My advice? Invest in a low cost index fund, close your eyes, and get back to work on saving more.
Remember folks, spending money always means you’re losing it. It’s never otherwise.