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To Save or Not To Save

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.

More from Meg at The World of Wealth

Topics: Financial Planning | 10 Comments »


10 Responses to “To Save or Not To Save”

  1. Joshua Says:
    March 31st, 2008 at 1:15 pm

    Bravo. Excellent article. We should not judge others on the way they lead their lives. Instead we should judge ourselves on the lives that we try to lead financially and individually.

  2. Nicole Says:
    March 31st, 2008 at 1:33 pm

    “We track our spending, set annual goals, and excitedly check our 401k balances periodically to see how much they’ve [decreased]”

    There, fixed that for you ;)

  3. Moneymonk Says:
    March 31st, 2008 at 3:56 pm

    Nice article, Meg . That’s why personal finance is “personal” everyone has different reasons why they save or not.

    Some are just use of doing only what they know. Some were just not taught.

  4. tom Says:
    April 1st, 2008 at 8:41 am

    I am a saver, but I also enjoy a good spend every now and then. I bought a 46″ TV a few months back (on 0% finanacing of course).

    I have no problem with non-savers. However, if something happens, and they are in a bind because of a lack of savings (not talking about job loss or anything catastrophic, whole other topic), I don’t want to hear about it.

  5. El Cheapo Says:
    April 1st, 2008 at 9:58 am

    I would consider myself a saver mainly because I highly value independence. But it wasn’t always this way. It took a job layoff from my high paying job and 8 months of collecting unemployment (and a couple months working retail for $5.50 an hour) to really get it ingrained in my dumb head! Had to learn it the hard way…

  6. Miguel Says:
    April 1st, 2008 at 12:28 pm

    I am not a saver by nature or upbringing, and also had to learn the hard way. Growing up ghetto poor did not provide any good examples to follow. Then, when I went away to a fancy college, I saw lots of wealthy people engaging in conspicuous consumption, which did not provide any good examples either. My wife comes from a saver family and I’ve learned a lot from her. That, plus having lived thru a couple of ups and downs taught me the value of saving.

  7. Foobarista Says:
    April 2nd, 2008 at 11:35 am

    I try to not “judge” individual non-savers. But collectively, there are enough non-savers who hit a rough spot and expect the taxpayers to maintain their lifestyle that I will admit to having a hard time having much respect for their opinions on money matters.

    I also am a bit “afraid” of them: after all, in a democracy, there’s always a danger that 51% of the people will vote to strip the collective wealth of the other 49%.

  8. anon Says:
    April 4th, 2008 at 8:56 am

    I’d add one more category: people like my parents, who never made a huge amount of money, never tracked it very carefully (and in fact, strongly dislike thinking about it very much or putting very much time into managing it)… but who always chose the most frugal route available and always maxed out every standard savings opportunity and are poised for an excellent retirement.

    Point being: not everyone who’s a saver is into reading and writing and checking in on the subject all the time…

  9. Lilly Says:
    April 4th, 2008 at 5:22 pm

    We have had a deposit account with National City bank in Buffalo Grove Illinois for longer than I can remember. We recently noticed that our deposits were not showing up until long after we deposited the funds. We have a small vending machine business and almost everything we make (cash) goes into the same savings account at National. The deposits have been showing up as late as 30 days after the deposit. The account has a substantial amount of money in it but we don’t need it for anything, so we have not been worried. However, my husband called National City to find out why the deposits were taking so long to post. They explained that the bank was having some issue and going through some changes and it is a temporary problem. This frightened us, so we started reading about National City on the web. We began to realize that National City Bank is in danger of bankruptcy and if not bought will fail. We also found out that their FDIC coverage may not cover all of our deposits, in all of our accounts. We decided to remove all our money and equity loan to a bank other than National City. Closing our equity line with them was easy because it had a zero balance. we simply opened a new line at Chase and closed the National City line. However, moving our savings and other accounts turned out to be very difficult. We wanted to get a certified check for the funds, so we set up an appointment with National City to do. We went in for our appointment only to find out that the bank could not cover our withdrawal. We were told that the bank was having some small and temporary solvency issues and we would be notified when they could either transfer funds or give us a check. I asked if there was any sort of a problem with our account or had we done something wrong. They politely told us they only wished they had more customers like us. However, it has been almost a month and they have not produced our funds. We have started now working with the Attorney General in Illinois to try to recover our retirement savings. It is apparent that National City is going bankrupt and unless they are bought or bailed out we cannot get our money. We are scared to death that National City will loose both our retirement and the money set up in trust for our mentally handicapped adult child. Does anyone have any advice?!

  10. Ginger @ Girls Just Wanna Have Funds Says:
    April 6th, 2008 at 12:15 pm

    “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.”

    This is totally me. While I’ve been on the personal finance kick for a while I still struggle with rationalizing my needs for the latest toys (Canon g9 anyone? lol), shopping excursions and eating out. But I realize that now more than ever its important to save as much as we can.

    My mentality has changed so much over the last few weeks, call it recession psychology but I am so there. Still, I treat myself every now and again and I can’t say that I’ve given up some of the more expensive aspects of my beauty regimen.

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