The Money You Save…
Why does it seem like the money you spend adds up faster than the money you save?
Since I started (and restarted) making a serious effort at getting my financial house in order, it seems that, despite cutting out spending on non-essentials, my savings haven’t equalled what I was spending.
While it’s disappointing to look at the numbers, the reason is pretty clear. After setting aside money for paying regular bills and necessities as well as savings, the balance goes toward paying stuff off. The good news is that, instead of buying new non-essentials, I’m getting stuff paid off.
The reason savings don’t quite equal previous spending is because savings are a fixed amount, whether a percentage or a dollar amount of your income–however you figure it–and spending was variable. In other words, you might spend a dollar here or there, but only save a dollar. You get a check, and you set aside a specific amount for savings. You don’t look into your checkbook later in the week and say, hey, I think I’ll save some of that. But, with spending, you’ll look at your checkbook and say, hey, I can spare a couple bucks to buy this…
Because of that, your savings may not add up as much as what your spending did.
Savings are generally planned out, while spending is more inconsistent. For example, you may have spent $5 for coffee and a donut for breakfast before work. Maybe one week, you went every day ($25) and another week you went three times ($15) and the third week you went three times ($15). So, if you decided to save that money instead of spending you, while you might cut out the coffee and donuts, you might have decided to save $15 per week. Over a three week period, you saved $45, whereas in the same three week period you might have spent $55. So, your savings may not grow as quickly as what your spending did.
On top of that, you might also have spent $15 on lunch one day a week, bringing your expenditures to $100 while your savings stayed at $45.
On the plus side, if you’re using that extra money to pay things off, that’s not a bad thing. But, if you want your savings to grow a little faster, you’re going to need to punch some numbers to see if you can increase your weekly savings or if it’s better to continue to pay things off. Ideally, even if you have debts to pay, you should be trying to save some money, even if it’s only a small amount, to save for emergencies or other situations that may arise where you’ll need some extra money.
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