When It's a Bad Idea to Save First

June 7, 2021

Is your curiosity piqued? I sure hope so!

Lest you stop reading and walk away appalled that a money coach could say such things, let me clarify right off the bat. I am actually a big fan of savings. I have become an avid saver and totally recommend it. But I’ve seen it happen very often that people save an amount they cannot actually afford and suffer because of it.

Here’s what it looks like:

  1. You make X amount of money.
  2. You save X amount of money before I do anything else. 
  3. Your expenses are X amount and are covered even if barely by the remainder. 
  4. You should be fine. So why are you always stressed about money?

It’s a lovely thought to save money first, and for a couple months all seems to be going fine. You think “what are those budgeting advocates talking about? I’m doing just fine without one.”

And then something happens. You need new tires for the car. Your Amazon Prime membership charge hits your account. The state wants your car registration renewed, or Christmas happens, or you buy new shoes because you thought you could afford them but actually couldn't.

And you have to pull the money out of savings to cover the spending. And then you feel lousy about yourself and the fact that you are always dipping into savings. And those thoughts spiral into really unhelpful thoughts like “I just can’t be trusted with money.”

Does any of this sound like it comes from personal experience? If so, I’ve done my job. This was basically my whole 20s and into my 30s. It was suuuuper fun. 

So what’s the alternative?

Deal with your actual current spending. First, before you try to save. It’s not truly saving if you really need that money for things in your monthly budget. 

What things might you not be accounting for (again, from a lot of personal experience):

  • Memberships
  • Clothes. As much as you think you don’t buy them, you really do.
  • Meals out. Again, you may not want to acknowledge them but if they are happening, plan for them!
  • Vacations
  • Gifts
  • Car expenses: maintenance, insurance premiums, registration fees
  • Hair and makeup
  • Vitamins and supplements

The more “monthly” you can make these expenses the less often you’ll need to dip into savings. Way less.

If you have extra money between your true and honest spending, this can be saved and it is much more likely to stay there, since you’ve accommodated for all your spending in your actual budget.

And if you use a zero-based budgeting app (kind of like digital cash envelopes), you’ll see this money accruing from month to month until you need it. You won’t accidentally spend it. 

Doesn’t that sound more fun? And more fair to yourself? You’re not bad with money or a terrible saver, just haven’t maybe appreciated how much life is costing you right now. Once you do and once you make a plan for it, you can decide if you want to change anything about it.

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