There are two instances in my life where saving REALLY started making sense. The first when I wanted a Nintendo Game Boy more than my own parents! (Haha….) and the second when I hit my first $50,000 in my 401(k ) :) Both drastically different stories and decades of my life, but both with the same underlying takeaway: Saving feels better when it starts adding up!
Now obviously this is a no brainer, but it took me quite a while to figure it out – as dumb as that may or may not make me. It wasn’t until an interview I did with Kathy Kristof of the L.A. Times 4 years ago when it finally sunk in.
She was doing an article on bloggers and their frugal living tips, and as always I managed to throw in something about my love for 401(ks) which I was obsessing about back then. For years my dad had told me to pay attention to it and soak up as much FREE money from my employers I could get since a lot of them had some awesome matchings going on, but it took me some time to get going :) And when I did, I got hardcore about it! To the tune of socking away 90% of my paychecks and living off pennies until my 401(k) was maxed out. Man those were the days…
Here’s a clip from the article:
J. Money of Budgets Are Sexy (www.budgetsaresexy.com; yes, that’s his nom de plume; he doesn’t want his boss to know his sideline) is only 29. But he has $115,000 in his retirement plan. Why? He decided to make the most of the free money he got in 401(k) matching contributions from his employer by saving the maximum amount possible each year. Better yet, seeing the balance rise so rapidly has inspired him.
“It’s hard to get motivated when you’re just watching your $50 or $100 contributions adding up,” he said. “But when I hit $50,000, I thought, this is so cool – and it’s easy. Now I’m used to living on less, so it’s not that hard to save.”
It was saying that 2nd to last line there out loud which really gave me the epiphany. The “this is so cool” part. It was! I was FINALLY SAVING MONEY!! And it was all because I had gotten over the “tipping point” of when all that hustling and frugality started becoming more worth it. It’s a lot more motivating to see $50,000 in an account because of your diligence than, say, $50.00 – even though that’s where we all have to start out at. It was at that point though when it really sunk in and I knew I had to keep on going strong and never look back. (And here we are 4 years later!)
This is similar to my childhood days of trying to save up for the original Nintendo Game Boy circa 1989. Every kid in the world wanted that thing, but it was just too hard saving a dollar here and there to finally reach the grand finale of $90 to get it. I’d save – at best – $5 or $10, or maybe even $15 and then I’d give up and start all over again. The pain of it taking forever and not being able to spend money killed all kinds of motivation for me. Especially since my allowance back then was only $1.00 a week! Haha… (Do you know how long 90 weeks is to a kid??? When there’s candy and baseball cards and everything else trying to tempt you? ;))
To make a long story short, I failed over and over and over again trying to save up for that thing, until one day I hit my record of $40.00. Again, that “tipping point” where it got a LOT easier to keep saving week after week – and faster too, it seemed! – ‘cuz I had crossed over that hump where the stash just got larger and larger every time I peered in! For the first time ever I felt like Scrooge McDuck, minus the ability to dive into my cash hoard.
After hitting that first $40.00, I eventually got to $50.00, then $70.00, and finally landed at $80.00. When I did a complete 180 and realized I no longer wanted to spend all my money on that Game Boy anymore, haha… A) Because it took me forever and a day to save up! And B) because it was a LOT harder to spend my own money I found out than my parents’ ;) It’s funny how that happens, isn’t it?
Now eventually I got my hands on that coveted little system ($30.00 used at a yard sale, WITH games!), but the point is I had to cross that tipping point first if I ever wanted to save a large enough chunk at any point in my life. And to *hold on to it* too for that matter! I didn’t magically wake up one day and start saving just because I wanted to – every time I tried that I failed over and over again. I had to somehow get to a decent amount number in my account FIRST to then lock me into the game and keep me from gong backwards again. And that number only increased as my years of age did ;)
I’m not sure if this helps any of you or not right now, but it popped into my head this morning so I thought I’d share it on the off chance it does… Sometimes I find going back to the basics refreshing! Who doesn’t like the power of momentum??
Anyone else have some stories on saving that really helps you pile it up? Maybe you do it naked, or while hiding in an igloo or something? ;)
(Awesome b&w photo by Naíra Dias)
Featured savings tip
You already know that banks pay $$$ for the privilege of holding your money…it’s called interest. But maybe you didn’t know this: that so-called interest can be as little as .01%. If your cash savings aren’t sitting in a high interest savings account that earns you at least 1%, you’re basically saying “no” to free $$$!
Now, obviously the 1% interest you get with a high interest savings account like the one at Discover bank won’t make you rich, but that extra 1% compounded over 30 years can grow into a *big* pile of cash. And if you wanna hit lofty $$$ goals, you should be looking for every edge possible.
Here’s another way to look at it: if you leave $50,000 in a regular savings account, that’s almost $500 you’re just throwing away, each and every year you don't setup a high yield savings account! Will you do 5-10 minutes of work right now to earn an extra $500/year for years to come?
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