This Elephant in the room is called Saving

Sometimes, when talking about money, I find there is an elephant or two in the room.  The first one that comes to mind is the ability to save: save for a car, a wedding, a vacation, college, updates on a house, retirement. When we broach the subject of saving, clients often feel uncomfortable. I see them suddenly swept by a wave of emotional angst.  They say they want to save BUT, they can’t. Life gets in the way or the money is already committed or….

I see young adults with financial commitments already stalking them…before they are even out of college. They have their car insurance, their games, their mobile devices, and more already demanding payment. How can they save?

And then the habits that this environment cultivates continues throughout the rest of their lives.

In the 20+ years I was a financial planner I found that many people had a difficult time saving. Their day to day bills, taxes and lifestyle funding took precedence. Many people saved in their retirement plans, up to the employers’ matching maximum, but not more.

I found that many people relied heavily on the genies in the room to “save” them: the stock awards, the inheritances, the winning lottery tickets, and the severance packages they negotiated with their employers. But this is not saving.

Saving is not easy. It requires discipline, long term discipline, the kind of discipline that becomes a habit. When we are bombarded by stories of those who are given high salaries and awards while others have no access to that, savings is seen as a losing proposition. Do you remember the 1990s when stock awards were making millionaires of people quickly while others were employed in the public sector or with private companies with only their salaries to live on? It showcased inequities and gave more fuel to the frustration of saving. After all who wants to be on a diet while others around you are enjoying the feast at the banquet table? But many lost their fortunes after the crash of 2000 or because when the stock value plummeted, their spending did not and awards were cashed in, at low prices, to fund lifestyles.

Saving money is a discipline. How do you discipline yourself to reward yourself later….much later for something you want today?

I think this is important to talk about.  Let me know your thoughts.

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1 Comment

  1. Glenn D. Price

     /  February 5, 2015

    This little piece is all-to-true, Bhaj, and very well stated.

    GDP

    Reply

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