By JLP | March 31, 2008
There is one basic difference between those who save and those who don’t.
We Savers (if you’re reading this you likely fall into that category) spend much of our free time reading and perhaps even writing about finance. We track our spending, set annual goals, and excitedly check our 401k balances periodically to see how much they’ve increased. Generally Savers would rather have a cushy emergency fund than the latest designer shoes or electronic gadgets.
Non-Savers like to compete with the Jones’, blow their bonuses and tax refunds on luxury vacations, and are comfortable taking on debt if it means having the latest cars, clothes, or toys. They’re much too busy enjoying life to worry about boring things like credit scores and debt-to-income ratios. Generally Non-Savers would rather splurge than put their cash in the bank.
The difference between these two types is not based on personality, education level, job satisfaction, or the ability to understand compound interest. It’s this: Savers value freedom of choice more than toys. This sentence struck me when reading a particularly interesting article on Yahoo! Finance this morning.
Savers often harshly judge their counterparts, righteously classifying them as lazy, indulgent, ignorant, even immoral. But that usually isn’t the case when you meet individuals who lack the motivation to save. I have friends who are hardworking, energetic, good people – who also don’t think twice about passing up a 401k match or financing new clothes – long term! – on a credit card. I, on the other hand, get antsy when my emergency fund drops below $5,000.
This doesn’t make me better, but it does draw a line in the sand with regard to priorities and values. Non-Savers are comfortable living for the moment and having to rely on others if push comes to shove. Savers strongly value financial independence and having options – and they know those things don’t come without some serious financial assets. Savers don’t want their standard of living to be determined by spouses, parents, or the government. They don’t want to resign themselves to jobs just to pay the bills. I for one want to go to sleep every night knowing that if I really want to, I can wake up and start traveling the world.
These are generalizations of course. Many people don’t save because they can’t afford to; others save only because they make far more money than they could possibly spend. But I’m talking about attitude and values, not actual bank balances. Of course then it gets even more dicey – to what extent can we choose our values? Some people go through specific experiences that deeply ingrain values, along with saving or non-saving tendencies – such as living through the Great Depression, or being born with a $20M trust fund.
For the rest of us it may be difficult to pinpoint the origin of the values that shape our savings habits. Whether you choose to be a Saver is likely the result of of a multitude of experiences and beliefs that shape your outlook. It’s interesting to analyze about yourself and an important thing to understand about others.
In any case, it’s important to seek a balance between the two mentalities. It’s no better to live on a shoestring and die with millions in the bank than it is to never save a dime. I’ll be the first Saver to admit to and justify periodic splurges, though my desire for financial freedom usually outweighs my (very real) desire for the latest fashions, to eat out every other night, and to become a regular down at the spa.
I know I might save and save and never actually achieve total financial freedom; and non-savers may be rewarded with good luck and/or handouts. But I sleep better knowing that I’m on my way, that my choices are growing along with my savings, and that no one else has to worry about paying my share.
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