The Difference Between Saving Money And Saving Money For A Reason
Posted on September 7th, 2010 in Budgeting, Debt Assistance | No Comments »
photo credit: alancleaver_2000
Few people find saving money enjoyable. After all the very essence of saving money is all about not spending money that you have. Money that you could spending enjoying yourself; going out, buying new clothes or gadgets or just paying less attention to your monthly budget and allowing yourself a few treats from time to time.
When you save money you are deliberately giving up these short term treats – this enjoyable lifestyle – with the hope that it will benefit you more in the future as your money has time to accrue and to generate interest.
And consciously giving up some of the pleasures of life can be tough, which is why I believe so many people struggle to save money. They’d rather go on vacation than put that money into a savings account where it sits there, teasing you, reminding you of all the things you *could* be doing with that money.
But if saving money is a challenge then there is a tip which can make is rather easier – indeed enjoyable – and that is saving for a reason.
Allw me to explain the difference. When you normally save money in your bank account you are really just putting away a sum of money you have decided on. That money is there for a rainy day but until that rainy day arrives that money really has no purpose other than to sit there gathering interest.
However saving for a reason gives you added motivation to save that money. Saving becomes fun because you have a goal you’re working towards and you know that the more you can save, the sooner you will achieve that goal of yours.
For example if you decide you would like to buy your first house you will likely need a deposit for it. Working out the size of mortgage you will likely be offered allows you to estimate the price of the house you can afford and equally what size deposit you will need. Let’s say you decide on a deposit of $20,000.
Now that $20,000 of savings has a meaning to you. A goal. It becomes a tool to help you achieve your dream of buying your first home. Every dollar you put into that account takes you closer to your dream.
Suddenly you *want* to save money. Indeed you want to save as much as possible because the more you save, the sooner you can buy that house you dream of. Saving becomes easy. Indeed it’s easy not to waste your money on a night out or an expensive coffee when you have a goal like this. As they say, “a dog on the hunt doesn’t stop to scratch his fleas”.
So if you’re struggling to save money each month despite your best effort take the time to consider what you’re saving for. Decide on how much money you will need for that goal then break it down into monthly chunks so you can see how long it will take you to save that money and also give you a target to put away at least that mount each month. And remember that every extra dollar you manage to put away will make your dream happen that little bit sooner for you.
