From Podcast #185: Saving Without A Purpose Isn’t Saving At All, the one in which Jesse makes a case for saving with a purpose.
So, what are you saving for? And does it really matter?
Yes. Keep reading…
Riddle me this: have you ever had the scenario where you dutifully save money? You actually have a separate savings account and you put money in it—you might even have a direct deposit right from your paycheck into a savings account—and you’ve got that money there and it’s being saved. You’re saving!
You have a savings account where you’re saving saved money. This is good.
But then you spend it on who knows what. Right? On something important—you wouldn’t raid the saved money in that savings account that you’ve been saving; you wouldn’t do that unless it was absolutely important.
Except the definition of “important” moves around a lot. It kind of morphs depending on the season. If it’s winter it’s raided more frequently. I have no research to back that up, but you know, the sun, happiness and then sadness and raiding savings accounts—that seems to go together.
So, why is it important, or why does this happen where you raid that savings account? It’s because your savings don’t have a purpose.
I’m not going to get into the nitty-gritty of the budget and how you actually don’t need savings accounts because the budget will do it all for you. Savings accounts are just jobs, right? But I do want to talk about purpose behind savings.
You have to attach purpose to your savings.
At YNAB, we call it “thinking long”—thinking ahead, having that big goal, and then recognizing that it’s the small decisions that you’re making daily, like right now, today, maybe tomorrow, but right now, that accomplish this big goal.
You’re making daily decisions that will affect that long-term goal. And when you have a specific long-term goal in mind, then suddenly you have context and can make those small decisions better. Better decision-making in that small decision moment over a long period of time guides you toward reaching a bigger goal—specifically, exactly what you’re saving for.
This is why I’m not a big fan of a nebulous, squishy, gray savings account. I don’t like it. I think you dip into it for things that you regret later on.
I would rather have you be more honest with yourself upfront about what you WANT. Define that with super-clarity, then those small decisions start to really line up and all point toward reaching those very, very specific goals.
Saving is good. Saving with a purpose is very, very good.
Save those savings in that savings account with purpose. You will thank me later.
Until next time, follow YNAB’s four rules and you will win financially. You’ve never budgeted like this. For more about how to stop living paycheck-to-paycheck, get out of debt and save more money, faster—subscribe to the You Need A Budget podcast today!