Comments on: Avoiding Spending Is Not The Same As Saving Money

By: Do You Dave Ramsey?

Do You Dave Ramsey? — Sun, 28 Jun 2009 01:14:36 +0000

This is so true Trent… it’s a great practice to remove unnecessary spending from our budget but wasted effort if we don’t use the money wisely.

No coffees on the way to work but pub stops on the way home are wash. Why stop the coffee habit in this scenario but if the money is being saved and used for emergencies or debt reduction then we’ve gained ground.

Thanks for sharing,
Dave

By: FruGal

FruGal — Tue, 23 Jun 2009 15:53:12 +0000

Great article, and so true! I just started to seriously look at my finances and while I am spending zero dollars currently, it hasn’t affected my savings. My goal is to be debt-free and have $10,000 in savings within a year. I’ll definitely keep this article in mind as I try to save.

By: Oskar

Oskar — Tue, 23 Jun 2009 09:21:01 +0000

True however sometimes i think an overlooked part of personal finance is the ability to focus your spending on the things that give you the greatest pleasure. Savings come first (at least 20% of income is a good basic rule) then I think the key is more focusing spending on the things you enjoy doning and less about saving more…

By: Amanda

Amanda — Mon, 22 Jun 2009 20:42:39 +0000

Instead of moving the $25 to a savings account and then once a month paying $100 towards your debt… why not just make the $25 payment on your debt each week…? Then balances that accrue interest daily will get more of an impact – you won’t be paying interest on that $25 each week that you owe on the card while the money sits in the bank.

By: Cecilia

Cecilia — Mon, 22 Jun 2009 15:33:46 +0000

Oh no! I am definitely guilty in this article. I actually thought that giving up something (e.g. eating out) will make me feel better. I did feel better until I used that money for other else. Although I considered it as a reward for myself, I still feel guilty after buying that “saved” money for other stuff.

Lesson learned here: Spend wisely.

By: FACSofOurLives

FACSofOurLives — Mon, 22 Jun 2009 14:33:47 +0000

Great post! I find it easier to skip that trip to Starbucks if I have a goal in mind as to where the money is going to go. For example, a while back my husband and I decided it was important for us to go on a date night once/month. In order to do this we needed to figure out where the extra funds were going to come from in order to be able to pay a babysitter for the 5 hours or so that we were going to be gone. Therefore, we both decided to cut some costs (I gave up my morning coffee run a couple times/week and he gave up going out to lunch a couple times/week) and because we knew where the savings were going (to provide us with a stronger marriage) we didn’t mind changing our habits as much.

By: beth

beth — Mon, 22 Jun 2009 12:56:25 +0000

1. save in a mutual fund(actually earns 10%),
2. spend less than I earn
3. and make more money

By: beth

beth — Mon, 22 Jun 2009 12:54:05 +0000

making more money is many times overlooked when it comes to improving financially. It requires being uncomfortable long enough to build a business that provides unlimited income potential. It’s worthwhile for my family and for the families I help.

By: Sierra

Sierra — Mon, 22 Jun 2009 05:29:14 +0000

Just this week I’ve noticed an interesting shift in my finances: suddenly, the cash allowance I have each week is piling up unspent. About a month ago, I stopped spending money, and now I have a large and growing pile of 20s where normally I’d be scraping for change by midweek.

When I noticed this I thought, “Oh! I have all this money? What should I do with it? I should spend it on something good…” and then realized I don’t have to spend it at all. I can just throw it in a savings account.

By: Juli

Juli — Sun, 21 Jun 2009 20:21:15 +0000

If you had a savings account linked to your checking account, you could do a transfer each paycheck. Periodically transfer the money to a more difficult to access account, such as a money market…

By: tadeusz

tadeusz — Sun, 21 Jun 2009 19:03:23 +0000

This post lacks two words: time preference. There’s little difference between buying coffee on Monday, or buying books of Tuesday.

OTOH saving, that is ability to postpone your consumption for years makes a real difference. You gain tons of flexibility and you earn profit by different forms of ledning to people who are more eager to spend now.

By: Michael

Michael — Sun, 21 Jun 2009 18:45:59 +0000

I’d like to see you write a sequel: saving money is not the same as securing your future.

By: Studenomist

Studenomist — Sun, 21 Jun 2009 16:53:16 +0000

I have done this before and believe we all have at one point- saving money on one area only to throw it away on another meaningless purchase. My take is that if I save money on unnecessary purchases (eating out, new clothes) I put it towards savings or towards something that adds a lot of value to my life (vacation). You can argue that a vacation is not needed but it is something that I love to do and since I see the direct value in it I don’t mind spending the money.

By: Todd

Todd — Sun, 21 Jun 2009 15:17:36 +0000

As usual, this a fantastic article. After my turning point a few months ago, I am starting to see “some extra cash” each week in my checking account. To HELP keep me from spending the money foolishly (as I would have in the past), I recently opened a second checking account at a different local bank and got a $50 bonus for doing so. It is a totally free checking account. As of today, I plan to send in an extra payment to either of my 2 credit cards or my car. Thanks to the readers here, my debt is not affecting my personal life as much any more. I have a new motto regarding the issue, “HINDSIGHT IS 20/20.” Keep up the good work as I look forward to seeing the comments from others.

By: Nathan J. Brauer

Nathan J. Brauer — Sun, 21 Jun 2009 14:49:12 +0000

This post is great. Also here’s another topic you can talk about that goes along the same lines. You can call it “Avoiding spending is not the same as saving money #2″. This would be focused on business owners:
You have to spend money to earn money. It is way too common for starting businesses to be so concerned about saving money that they cut things that would turn them a profit. For example, when I was a sales rep, it was my job to call to set up appointments, then go on them. The problem was, I was a student at Uni and I had a limited-minutes contract with Verizon (before they had the $99/mo unlimited plan). To make it even worse, I was on a family plan with my father, mother, sister, and grandma. I always went over my minutes so in an attempt to save money I started making less calls. And therefore I set up less appointments. And therefore lost money. Another example is a for-profit school who decides to start a music program but in their attempt to save money, they buy all their instruments from India (bad quality, in case you didn’t know) or they under pay their music teacher resulting in a new music teacher every year.

Here’s one last example that shows that these ideas can also be brought to the non-business lifestyle: Knives and Tools. People spend small amounts of buying poor quality knives thinking they are saving money. But the reality is, the average lifespan of a knife is 18 months. So people end up replacing them over and over and over and over again (and also risking physical harm; a dull knife is the most dangerous knife) when they could have cut out a bit more cash (pun intended) to begin with and bought knives that are guaranteed forever (like Cutco’s Forever Sharpness guarantee where they will send a rep to your house to sharpen it free anytime you need, they will also replace any broken tools, no questions asked, not “lifetime” but literally forever). The same can be said about Snap-on tools, or Cutco’s cookware, or energy efficient lighting/appliances/etc.

Hope you use this :) Feel free to quote me.

By: SavingFreak

SavingFreak — Sun, 21 Jun 2009 14:12:00 +0000

Great post. This is why effective budgeting is so powerful. It identifies the needless spending areas and then allows you to reassign that money to something productive before you even have a chance to spend it.