Saving has taken a battering over the years in popular media. Whether it’s the gurus or motivational speakers or whatever else you call them they all say the same thing about saving; it doesn’t change the amount of money. A dollar saved is still a dollar the logic goes. I will admit that many years ago I bought into this thinking too but time and experience have woken me up to the fact that saving isn’t the boring act that we somehow agreed it is. Saving gives you power. Let’s unravel the idea of saving to understand this.
Saving
Starting with the definition of saving can help us understand what I’m driving at here. Saving – to rescue from danger or possible harm, injury, or loss. This is the simple verb definition in general use. You can then throw in the alternate meaning to prevent the waste of a particular resource. When it comes to money we can define saving as income not spent or deferred consumption. See none of those things is really exciting. But they all acknowledge that saving when it comes to money is the act of controlling consumption to have residual income.
How do we save?
This question refers to how we hold the savings rather than specific actions for saving which you can find here. Saving can be done through many means but the most popular and viable are deposit accounts and short term savings products. The argument against saving has always been that it does nothing to increase the value of money. That is fair, even where you find a saving method that is in stable currency the upside growth of your money is low. So people advise investment rather than saving. This turns out to be a mistake because saving and investing are complementary rather than mutually exclusive.
Start with why
I suppose the big problem with our point of view on saving is the reason we save. Saving because of some unpredictable event in the future is difficult. I recall a friend who’s household income grew rapidly in a matter of years. They were certainly in the high-income territory and decided it was time to buy a house so they went to see a bank about arranging a mortgage. The bank denied the application citing the lack of savings or any residual income. The bank was saying you make a lot of money but you also spend it. Of course my friend many times had stated they didn’t need to save. Well, the bank taught them a vital lesson. So clearly there are more reasons to save than a rainy day that may never come. For those wondering the friend did have to go back and start saving and eventually got accepted by a bank for a mortgage.
It’s not all rainy days, surely for each of us, there is something we would like to do that would improve our lives. Perhaps study something, start a business or something else that will change our lives for the better. Saving can very well give you the power to do those things.
Power = ability
Power in simple terms is the ability to do something. It could be your deposit on your mortgage. Perhaps you need starting capital for a business. Maybe you want to purchase a piece of equipment that will change the way you work? It could be just about anything. Perhaps an investment opportunity comes up that’s too good to miss? Just make sure it’s a real investment opportunity. Saving isn’t about deferring expenditure so much as it is about giving you power and options in the future. And in some cases having options is power. Like having the choice to leave a toxic work or business environment and having savings to cushion you through the transition. Or surviving black swan events like the coronavirus outbreak without making massive changes to your lifestyle.
Saving is power
Saving is neither boring nor a waste of time. By all means, get the best value for your money. Bad things have happened to savers in Zimbabwe, twice in the past. That says more about the perils of the Zimbabwean economy than the act of saving. Saving can be whatever you choose to make of it. Choose to make it power.
