Opposites attract. Cliché? Yes. True? Eh, the jury’s still out, but at least on money issues, it’s pretty close. If you listen to Dave Ramsey long enough, you’ll hear him talk about the “nerd” and the “free spirit” in a relationship. What’s he’s referring to is the natural inclination of one person in the relationship to be drawn to the “nerdy” aspects of money: the budgeting, the account monitoring, the spreadsheets, and so on. The other person, the “free spirit,” is drawn to the, uh… other part of money. Namely, spending it. The nerd is usually more of a saver, and the free spirit is the spender. Some relationships have two nerds, and some have two free spirits, but most will have one person that identifies more closely with one stereotype than the other.
Most of us know ourselves pretty well when it comes to money, if we’re honest. We know that the debit card needs to be left at home if we head to our favorite store with a friend. Or, if you’re like me, you know that you’ll need to plan to spend at least three hours for a grocery shopping trip, because what if the name brand stuff is on sale for slightly cheaper than the store brand, but it’s also in a smaller package? Seriously, my wife is a saint for still agreeing to take me grocery shopping with her.
No matter which extreme you tend towards, this post is for you. Spenders, you’ve got to learn to save money, no matter how painful it is. And savers, we can’t just save the money and be done with it. That’s not enough. In order to truly get a handle on your money, you’ve got to start looking at savings as “deferred spending.”
Tons of money mantras out there revolve around saving money. Pay yourself first. Save a tenth of everything you get. Set aside 3-6 months’ worth of expenses. And that’s not necessarily bad advice, it’s just incomplete. It’s missing the why. The missing why is why spenders can’t seem to keep anything in their checking account until next payday, and why savers get typecast as Scrooge McDuck every year in the company Christmas play.
Let’s say you follow that advice above, and you’ve got $20,000 in the bank. That money does no one any good until it has a purpose assigned to it. Most of the time, an amount that large just sitting is called an “emergency fund,” which again, is good, but it’s still incomplete. What’s an emergency? Are we talking like the dog threw up all over the place this morning, so you didn’t have time to pack a lunch for work? Or like Thanos succeeded in getting all five infinity gems, killed half the planet, and a suddenly driverless car tore through your house and your entire insurance company has disappeared? It’s your money, so the definition is up to you, but you need to plan for a situation where that money gets used. You gotta give it a why.
On the other hand, savers, listen up. I know we try to plan for every single possible scenario that might happen to us, but we can’t do that. We’re just not smart enough to know that much. So we have to be willing to have some unplanned buckets and then actually use them. Like that emergency fund. Let’s not be so afraid of disturbing it that the lightning-struck-a-tree-which-exploded-into-flames-and-scorched-the-garage repairs come out of the same part of our budget as toilet paper, because “it’s technically a household expense.” Think of your income like a huge bucket of water, and each budget item is a hose you hook up to the bottom of the bucket. You can only attach so many hoses before each one is just barely trickling out, not really accomplishing anything. Keep those budgets streamlined so they’re more effective.
In order to make the best use out of your money, you should give every dollar a purpose, even if you’re not going to use it right away. And once you’ve identified that purpose, stick with it. Going back to the bucket-and-hoses analogy, saving money is like putting a cap on the end of the hose. You can let it fill and build pressure, which is great for stuff like emergency expenses, buying a car or house, or even just something extra that doesn’t fit in the normal monthly budget, but if you just let it build and build and never take the cap off, it ends up being a waste, or worse, an idol.
Money is a tool. Tools are most helpful when they are used.