5 Truths About Saving Money (that nobody talks about)
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Saving money is a topic I frequently discuss because controlling our spending is crucial for achieving long-term goals. But while saving is vital, it’s equally important to recognize various situations, thoughts, and behaviors that can hinder our progress. So today, I want to shed light on some harsh truths about saving money that often go unspoken.
Certain factors can make saving money more challenging for some individuals, so it’s not just a matter of willpower or personal discipline.
1. Your brain’s natural wiring can influence your saving ability
Saving money doesn’t come easily to everyone, and it might not be entirely your fault if you struggle with this. In fact, research suggests that our brains may be wired for either spending or saving.
Maybe you’ve heard people describe themselves as either savers or spenders. Interestingly, there’s some truth to these statements.
If you find saving money challenging, your brain might be naturally inclined toward spending. And if so, overcoming this impulse and becoming a better saver will require going against a natural impulse.
This could possibly explain why it’s so much easier for some people to stick with a budget, build a savings account, and get ahead financially
Now, having a brain that’s wired for spending doesn’t mean you’re doom. However, you’ll need to put forth a little more effort with regard to self-control and being intentional with purchases. This might involve recognizing and avoiding spending triggers, creating a splurge budget, and keeping visual reminders of your goals.
2. You can’t rely on others to secure your financial future
Honestly, I used to think that everyone believed what I’m about to say, but I’ve come to realize that many people don’t share this understanding. Let me explain.
Recently, I made a TikTok video where I suggested that if parents had to choose between saving for college or saving for retirement, they should prioritize retirement.
Why?
Well, because while there are options to pay for college, there’s no loan for retirement.
Throughout my years of researching and writing about finance since 2005, I’ve only come across information that supports this idea. It just makes sense to plan for your financial future. However, I was surprised by the responses I received on that video. Many people disagreed, saying they would prioritize college or rely on their children for retirement.
To be honest, this caught me off guard. I didn’t realize so many people were banking on their kids for their retirement. But let’s be realistic here. It’s not selfish to be honest about your financial limitations. Regardless of your relationship with your children, relying solely on them for retirement is risky. What if they can’t support you financially when the time comes? Or what if they don’t want to? What’s your backup plan then?
Ultimately, it’s your decision, and I can’t tell you what to do. However, if you’re feeling stuck and facing a difficult choice, I suggest speaking with a financial advisor. They can provide personalized guidance on how to navigate this situation. Your financial well-being is important, and you don’t want to do anything that could harm it.
3. You can’t save what you don’t have
The reality is that you can’t save what you don’t have.
Many people want to save, but their income is simply not enough. They have already cut back on everything they can, and there’s nothing left to save. In such cases, relying solely on your current income may not be sufficient to get ahead or pay off debt.
If you find yourself in this situation, I encourage you to stay positive. You can’t fix an income problem overnight, but with some planning, you might be able to improve your financial situation.
One suggestion I always make is not to rely on a single income source. I understand that not everyone feels suited for entrepreneurship or self-employment. Starting a side hustle or business takes time and energy, which you may not have.
However, if you’re barely breaking even or tired of feeling financially stuck, it might be time to consider a side hustle.
Think about developing a passive income stream where you can continue to earn money even after you’ve completed the work. Some ideas could include affiliate marketing, blogging, or creating content on platforms like YouTube. The great thing is that in today’s world, social media gives you the opportunity to share your knowledge and turn it into a side hustle. (Related: Download my insider’s tips to making money as a freelance writer and leverage your existing knowledge to make extra money).
Remember, information is valuable. If you have expertise in a particular area, whether it’s finance, cleaning, pets, gardening, or crafts, you can use social media to share what you know and supplement your income.
One of the best things about a side hustle is the potential for it to grow into something bigger.
When I started freelance writing in 2005, my goal was to earn a few extra hundred dollars a month. Honestly, I didn’t believe it was possible to consistently make a decent income. However, in 2012, it became my main source of income, and I’ve been able to earn a full-time income by working just two to four hours on my workdays.
4. Don’t wait until it’s too late to prioritize saving
It’s common for us to prioritize other things and think we have plenty of time to build up our savings. However, it’s crucial to save an emergency fund before an emergency occurs.
While this may seem like common sense, it needs to be emphasized because some individuals feel invincible and believe that unfortunate events won’t happen to them, despite knowing that they can. You’ll never hear someone say, “I wish I never saved an emergency fund.” This simply doesn’t happen.
Therefore, it’s important to prioritize saving money. Start with small amounts like $10 or $20 a week and gradually increase it as you find ways to reduce other expenses. By making saving a priority, you can build your emergency fund and protect yourself from financial uncertainties.
5. Saving alone might not be enough
You might have seen a commercial of a lady saving money in a jar over several years to climb Mount Everest, only to arrive at the mountain with a walker.
But although humorous, that commercial touches on a very important issues: Saving money can only take you so far.
Yes, saving money is important, and everyone should have at least three to six months’ worth of living expenses or income (or even 12 months if it brings more comfort).
However, if you have ambitious financial goals, especially at a younger age, relying solely on saving money will only take you so far. It’s crucial to consider investing your money too.
I understand that investing might seem intimidating, especially if you’re new to it or not confident in picking individual stocks. But I assure you that it’s not as difficult as it may seem, and getting started as a beginner investor is easier than you think.
Instead of individual stocks, you can invest in funds like mutual funds or ETFs, which diversify your money across multiple investments. You can even use a robo-advisor that selects investments based on your goals.
I strongly urge you to seriously consider investing outside of your retirement account. Start with small contributions and gradually increase them – but the key is to be consistent and start early. Investing can play a vital role in achieving your big financial goals, so don’t let fear hold you back.