The day I started to actually commit to saving my money was when I learned how debt works. I was shown a Youtube video called, How The Economic Machine Works by Ray Dalio. In the video, Ray describes debt as a means of increasing spending in the present and decreasing it in the future. Once I realized that that is how debt works, I wanted to only create debt between my “current self” and my “future self.”
Instead of owing money to a bank, why can’t we just owe money to ourselves? Savings in its simplest form is postponed spending. You are giving money to your future self. If you think of your savings as your “most important credit card bill” that you have, the obligation to pay your future self becomes easier.
“Seeing your monthly savings account deposits the same way you see your monthly credit card bills may help you prioritize them more.”
We often prioritize the wrong financial obligations. The most important bill that you should pay first, before paying any other bills, is your monthly savings deposit. If you reframe that deposit as a bill, you will prioritize that commitment to yourself even more. We tend to spend within our means, so we might as well spend on our future first.
Even if you decide never to own assets, doing the bare minimum of saving 10-20% of your after-tax income every month will put you ahead of so many other people. After all, the average American doesn’t have $400 in emergency savings. Although this statistic is regularly debated, trying to get $400 in savings is an attainable goal to start with. If you can achieve this, next try to maintain a consistent monthly contribution that can only be used by your future self. Even better, open an account that will penalize you for early withdrawals, like an Individual Retirement Account (IRA).
Don’t be a statistic. Saving your money can help you do so many things, like setting yourself up for a mini-retirement, preparing for future debt payments like a mortgage, or it can just provide simple peace of mind (this is why I have a savings account).