Several weeks ago I wrote about the #1 reason why saving money is important. In “O Lord Jesus, It’s a Fire!” I discussed how saving is vital because we are guaranteed to face emergencies in our life. Having some cash set aside reduces most emergencies to minor inconveniences.
The coolest part about having an emergency fund is that it causes us to emotionally and mentally relax. We realize, with some money reserves in place, that we will be able to move through the crisis with relative ease. We no longer have to stress out as we scramble to come up with cash or go into debt to fix whatever problem has come about.
I’ve believed my whole life saving money was important, especially for a “rainy day.” But in my saving money belief structure, I was missing a vital element. To incorporate this missing link it into my life, I would have to do something very un-American. I would have to come face to face with what I really didn’t want to do…
I would have to learn to save for purchases.
In general, the American culture does not teach saving for purchases. We believe in having it now and paying for it later. Carry a few plastic cards in your wallet and any desire can be instantaneously gratified. That’s the mantra.
That’s pretty much where I was for most of my adult life. And it served me fairly well, except for the fact that I was overspending. My wife and I felt like we were being responsible in that we always paid our credit cards off at the end of each month. Truth is, we were not being responsible enough in that we weren’t setting definite limits (in our budget) and were “pleasure spending” all too often.
Another issue we faced because of our irresponsibility is that we were always having “gotcha” moments. You know…the cash flow is going well for the month and then…boom! A big bill would come in the mail that we had “forgotten” about. Or the kids had rec league soccer fees. Or the dog needed to go the vet. Or this…or that…or the other thing…the list went on and on. Every month there was at least one abnormal expenditure.
What do you do when moments like that hit? You either charge it or dip into your savings to bail you out. We did both and it frustrated both of us.
The monthly frustration (and some well timed listening to some personal finance podcasts) finally drove us to consider something radical to us at the time. Why not save money in advance for items that we want to purchase or for bills we know will be coming due at certain times during the year. Could we really set aside X amount of dollars each month until we had enough to pay for stuff with cash? Interesting concept.
(Looking back, it seems silly we hadn’t figured this out by that point in our lives. The light bulb had just not clicked on in our mind. And, quite frankly, nobody around us was doing it either…or at least they weren’t talking about it.)
So we tossed out what paltry spending plan we had and began to change the way we thought about saving. It wasn’t easy. Years of faulty thinking had to be rewired. But I believe that decision marked when we started to get serious about our personal finances. We were doing something different…something our culture doesn’t believe in.
Tomorrow I will lay out the details and structure about how we did (and still do) this. Until then…
Do you think I am being too hard on our culture when I say it’s un-American to save for purchases? Did using credit cards ever cause you to overspend like we did?
Prior Post: For the Love of Money