“I walked home to save bus fare.”
“Gee, you could have saved a lot more by not taking a taxi.” – old joke
We make a huge deal about the amount we save on ordinary items. “I bought this $4,000 TV for only $2,800. I saved $1,200!” I hate hearing that. Big deal. In that case I saved $1,000 by not spending $1,000 on lottery tickets.
This line of thinking leads us to think that what’s really important is how much we spend, not how much we save. Who cares if you saved $5 a month by getting “free” HBO if it meant upgrading to the premium service which included a sports package you didn’t really need but also came with a $15 price tag?
If you’re spending money, you’re spending money. Not spending even more isn’t a big accomplishment. I am not going to pat you on the back.
The only time I can think of when I actually saved money is when I negotiate. When I haggled down the price of my haircut, I was ready to pay $20, but getting it for $15 was just a bonus. After years of my family being on the $160 phone plan, I negotiated it down to under $100. I wasn’t overpaying, I was simply paying what everyone else was paying. But by doing some research and negotiating with the customer service representative, I was able to cut costs while still getting the same service. In these types of situations, we actually save money that we would have otherwise spent.
People need to find a better way of calculating how much they are saving. Instead of adding up everything they could have spent minus what they actually spent, we need to focus on what we’re really saving: The percentage of take-home salary that we put in various accounts. In this case, all that matters is what we save, not how much we spend. Who cares if we had $300 in restaurant expenses for the month if we have a fully funded emergency fund and contributed the maximum to our retirement accounts? And that’s what really counts.
After all of your expenses (housing, utilities, food, shopping, etc.), are you saving the 10-15% of your paycheck you planned?
This is a guest post from Daniel Packer over at Sweating The Big Stuff. Daniel writes about negotiating, budgeting, and saving, while maintaining a high quality of life. To read more, subscribe to his feed or follow him on twitter.