We've heard all our lives that we need to save. But what does that actually mean, and what if the cash flow is limited?
By Gin A. Ando / Illustrations By Andrew Snavely
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We're getting older, gentlemen. Not gettingold, but we are maturing. We are driving past the wild house parties on the way to the lounges and passing the pizza rolls in the freezer section of our grocery stores and heading for the bakery. And we are looking at our bank accounts—or lifting up our mattresses—and either shaking our heads or nodding.
The days of casual, reckless spending are over. Our concept of money is changing (remember when $100 was a fortune?) and so too is our notion of saving.
Saving money. It seems like such an adult thing to do and, really, it is. But doing so doesn't trigger an automatic belt-tightening or huge changes in the way we live our lives.
With the help ofForbescontributor, financial coach, and owner of CreativeMoney Mindy Crary, we can get started accruing our dollars and maybe, just maybe, see our bank accounts balloon in a way we dreamed of as children.
It Isn't About Instant Gratification
Saving money is a process, not a one-step deal. Don't expect to be feeling like you've made it within the first week—or month—of this great journey, no. It's about saving money to be able to have a lump sum, Crary says, for future decisions, whether it's an emergency payment or even throwing ourselves into the stock market.
The point is to keep your life normal—if you start cutting back on everything, saving money becomes a chore. You'll feel constrained and maybe even bitter about it. If you're putting money away while keeping your lifestyle steady, however, you won't even notice the hole the extra dollars you throw into the bank causes.
“More than anything, cash flow creep is what screws people up,” Crary says. “Keep your lifestyle the same for as long as you can to save money up front, then, when you feel like you have a solid financial base, you can start looking at all of the ways you want to raise your lifestyle.”
It's about living better. Grind it out today for a better tomorrow.
Be Realistic
Starting to save money comes with one prerequisite: You have to be making enough money to save in the first place. Don't go about starving yourself to be able to put money away. Get the job that lets you have some luxuries to eventhinkabout cutting to save some dough in the first place.
Considering loan repayments may be inching up on us or are already slowly strangling us with their cold, cold hands, Crary suggests taking care of everything before rolling up the sleeves and getting serious about saving.
“Focus on one thing at a time,” she says. “It usually works out to being stabilizing or improving cash flow until you have enough to pay down your debt. Then, pay down debt aggressively, while, at the same time, building to that $2,000 cash mark, then build cash some more, so you have three to six months of expenses.”
That $2,000 mark is where Crary says we should all be looking to get to—at first. So, if you need an achievement to be looking forward to, aim for the $2,000 bank account. While that may not seem like a lot of money in the grand scheme of things, attempting to save $2,000 while still paying rent, other payments, and allowing yourself some luxuries is tough.
But it's that difficulty, that test of willpower, that will allow us to reach that two-grand threshold and keep pushing further. If you can make it to $2,000 without suddenly throwing it into an impulsive cruise around the Caribbean, it's a good sign your mindset is maturing.
At the bottom level, it's about understanding our abilities to pay for something and, if we can, so what? Just because we can doesn't necessarily mean we should.
Some Suggestions… Kind of
These kinds of lists are insipid. They're usually brimming with genuinely worthy and effective ways to save money, but, well, thetime crunchis what gets us all.
At the root of it, we're all confronting a decision: What are we willing to pay other people to do for us? To that end, there's a lot of things we see we can save money on.
It isn't this writer's place to say “You should brew your own coffee/grind your own beans/wash your own car/drink at home/cook at home/cut back on electricity by using candlelight/bring a gallon Ziploc bag to fast food restaurants to fill with soda at the self-refill machines/etc.”
If you like getting a cup of joe every morning from a coffee shop, that's perfectly fine. It's your ritual. But if it's something you could dowithout, second guess it. As Crary says, live your life the way it is and build money from not cutting out of your daily life.
If you're going out and blowing $200 on the weekends with some friends, however, that's a different story. Drinking at homeisn't a bad thing.
Starting Out
Taking the first step is daunting, but we have to do it sometime. A good friend of mine's father has been buying shares of General Electric since he started working there some 30 years ago—and it's paid off. Little increments like that, Crary says, isn't too harmful.
“If someone wants to throw $50 per month at an investment, I am not going to object, but if it's going to cause them to go into debt again, then I'll urge them to put it in cash for now,” she says. “At some point, cash will build up enough that they can make a lump sum investment.”
For now, she says, as we start our climb toward success in whatever career path we find ourselves in and start seeingrealpaychecks, it's important to remain calm. Don't blow all the money on a new suit or a new toy. Keep it in check, fellas.
That being said, however, Crary says it's all right to indulge every now and then.
“It's about balance,” she says. “Make it a small reward instead of a new $2,000 a month condo.”
Saving money is simple—in concept, at least. It's about keeping conscious about where our funds are going and, far more importantly, where they'renotgoing. Whether you're cutting back on Internet usage, eating at restaurants, or anything else, just remember: Saving money as an action itself is a process. Don't feel as though you're condemned to a Spartan lifestyle. The most effective way to save money is to put some money aside when you can and, well, live the way you always do.
What can be easier than that?
