Six Non-Patronizing Tips for the Young Fabulous and Broke

Are you one of the young fabulous and broke (the title of a recent Suze Orman book)?

Or are you a middle-aged person concerned about the saving habits of a loved one who can fairly be described as one of the young fabulous and broke?

Young, Fabulous and Broke

One of the questions that I am asked most frequently is: “How can I persuade my son (or daughter, or niece, or nephew) to save money?” There are a lot of middle-aged people today concerned about people they love who can fairly be described as young fabulous and broke. The problem with the advice you usually hear in response to this question is that it is patronizing. This article sets forth six non-patronizing tips for the young fabulous and broke.

The first non-patronizing tip for the young fabulous and broke is to try not to react too negatively to the patronizing advice often directed at you by well-meaning older people who want you to save more because they love you and want you to be happy.

Those of us who are getting up there is years have seen how people can get hurt by unexpected financial setbacks and it pains us to see the young fabulous and broke not putting something aside for a rainy day.

The conventional advice used to get young people to save really is patronizing. I always found it annoying when in my non-saving years someone would bring up one of those charts telling me how $1 would be worth $37 billion by the time I was age 142 if I had only been sharp enough to have invested it in mutual funds when I received it from grandma on my third birthday. You know what? Young people are smart in some ways and dumb in some ways, and middle-aged people are smart in some ways and dumb in some ways. One of the ways in which middle-aged people are dumb is the way in which they aim to persuade young people to save.

We say that dumb stuff for good reasons, though. You’re going to take a big hit one of these days. You won’t see it coming. One day for no good reason you will no longer have that paycheck you count on to finance all the good stuff going on in your life. You are going to feel hurt, and confused, and afraid rather than young fabulous and broke. This is the thing that we know that you don’t. You may know it in some theoretical sense, but we have seen it. It either has happened to us or to our friends. So we have a true edge on you on this one.

We are weak in the communication department, probably because we were not great savers ourselves when we were young. Our message often sounds patronizing (because it is) but the message is an important message and a well-intended one. So please try to filter out the patronizing jizz-jazz and tune in to the part of the message that really does make sense. You really do need to make more of an effort to save. It really does not make sense to remain too long in the ranks of the young fabulous and broke.

The second non-patronizing tip for the young fabulous and broke is to forget about trying to finance your old-age retirement.

The reason why the saving rate is so low is that most people associate saving money with financing an old-age retirement. Financing an old-age retirement is an important goal, of course. It also is a hard one to pull off. Thinking about it often generates fear but rarely generates effective action. People who associate saving with worrying (but not doing anything about) their old age often lose sight of all the reasons why they might enjoy attaining good measures of financial freedom earlier in life. It’s a mistake.

Buying Stuff Robs You of Freedom

Highly effective savers generally are saving for some reason other than to finance an old-age retirement. They do end up being able to retire, of course. Money is fungible, so money saved for one purpose early in life can be put to a different purpose somewhere down the road. The key thing is not to let the idea of financing an old-age retirement be the primary goal driving your saving effort. That goal will not provide benefits for many years. So it provides little motivation. Focus on that goal, and you will not save effectively.

The third non-patronizing tip for the young fabulous and broke is to identify a saving goal that really turns you on.

If saving to finance an old-age retirement doesn’t work, what does? Here is a list of six saving options designed to have appeal to the young fabulous and broke:

1) Save to be free of “The Man,” to be able to walk away from any job that become unbearable to you;

2) Save to be able to stay home with your kids when you have them, or at least to stay home until they are ready to go off to school;

3) Save to be able to take a year-long sabbatical and travel the world long before you are old and gray;

4) Save to pay off your mortgage so that you really own your home and it can never be taken from you;

5) Save to be able to go into business for yourself; or

6) Save to be able to shift to a career that pays less but that provides more in the way of personal fulfillment.

Those are some ideas to get you started. The key is to identify a goal that means something special to you. That’s the sort of goal that will motivate you to really save and quickly leave the ranks of the young fabulous and broke. Once you get the hang of it, you will become better and better at it. Saving is like a lot of other things in life in that you become good at it not by reading about it or by thinking about it but by doing it.

The fourth non-patronizing tip for the young fabulous and broke is to make a budget.

Saving Is Not Boring

You must have a budget. There are some money advisors who say that it is unrealistic to expect people to keep budgets because they are such a drag, but i say these money advisors are wrong. Budgets are essential. Just about all of the world’s great savers keep budgets. There’s a good reason. Budgets work.

You have probably heard people say that a young worker should think of himself or herself as a small company competing with other young workers/small companies for success in the New Economy, that you should think of yourself as You, Inc. How many companies do you know of that don’t keep budgets? There are none. That’s because without a budget a company doesn’t know what it is doing or where it is headed. When you don’t know what you are doing or where you are headed, it is real hard to get what you want out of life.

The purpose of a budget is not to tell you that you can’t do what you want. The purpose of a budget is to make it possible for you to do more of what you want. Like Linda Ronstadt did in her song “You’re No Good,” I’m gonna say it again. The purpose of a budget is not to tell you that you can’t do what you want. The purpose of a budget is to make it possible for you to do more of what you want.

The fifth non-patronizing tip for the young fabulous and broke is to think of your budget as your Life Plan.

There are things you want to do with your life. Your budget is your plan for becoming able to do them. Think of it that way, and keeping the budget won’t be a drag anymore.

It is normal and healthy for you to be bored by the idea of counting nickels and dimes and quarters and putting nice little numbers in nice little rows of spending categories and all that nonsense. It makes you feel like Ebeenezer Scrooge to be spending your time doing that junk. It makes you feel like a miser and misers are unlovable and you want to be loved. So your dislike of budgeting comes from a healthy place.

It’s a misguided understanding of what a budget is that is holding you back. A budget is a plan. That’s it. You can make it a plan to spend every cent you earn, if you like. If doing it that way gets you started keeping track of what you spend, that’s fine. The important thing is to gain the knowledge of where your money is going that comes only to those who keep budgets. So write a budget that calls for you to spend it all.

Saving for College Students

Just wait. You will change that budget down the road. Once you see where the money is going and how you could be having so much more fun if you were directing some of your earnings to saving, you will feel an impulse from within to make adjustments. The key is to begin keeping the budget. If you don’t keep a budget, you are likely going to remain in the ranks of the young fabulous and broke for a long time to come. Not good.

The sixth non-patronizing saving tip for the young fabulous and broke is to understand that saving permits you to spend more than you earn.

That’s what financial freedom means. How does somebody retire? By accumulating enough of the green stuff so that he can live off of the money generated by the green stuff rather than off the money he gets by showing up at an office or factory each morning. Retirement is not the only possible benefit of financial freedom. There are all sorts of possibilities that open up to you as you become gradually more financially free over the course of your life. Spend a few moments imagining a few possibilities.

Does the idea of being able to spend more than you earn appeal to you? Of course it does. It’s the powerful appeal of that concept that explains the great popularity of credit cards. Saving is a different way to do it. Saving is a way to do it without going into debt. Saving is a way to do it by making you rich rather than by making the credit card company rich.

Save. Get rich. Do the work you truly love. Live the life you really want to live. Escape wage slavery. Get out from under the thumb of “the Man.” Break free!

Do it while you’re still young enough to obtain the greastest possible benefits from doing so.


Advertisements for Self-Denial

The biggest obstacle to effective saving is the power of marketing. There are lots of people who benefit from our decisions to spend and just about no one outside of ourselves who benefits from our decisions to save. So there is a lot of money spent to entice us to engage in immediate self-gratification and just about none to entice us to engage in self-denial.

Advertisements for Self-Denial

The solution to the saving problem is the creation of advertisements for self-denial. We need to develop those advertisements ourselves and then run them in our heads when we are enticed to spend.

Self-Denial Advertisement #1 — A Decision to Save is a Decision to Enjoy a Larger Amount of Life Enhancement at a Later Time.

There is an important sense in which saving is not an act of self-denial at all. If you refrain from eating chocolate-chip cookies with lunch, that’s self-denial. You permanently give up the enjoyment that you would have obtained by eating the cookies. It’s not like that with saving. To save is to defer the life enhancement obtained from the dollars in question. You don’t lose the enjoyment that comes from spending those dollars by electing not to spend them immediately.

In fact, saving leaves you with a greater number of dollars. Saved dollars are invested and thereby generate new dollars, which also provide life enhancement in future days. Saving does not subtract from your enjoyment of life, it adds to it. That’s a funny sort of “self-denial.”

Self-Denial Advertisement #2 — It’s Never Really About Self-Denial.

If you read Self-Denial Advertisement #1 carefully, you may have noticed a flaw in the argument. I claimed that, when you take a pass on chocolate cookies, you permanently give up the enjoyment you would have obtained from them. In a strict sense, that’s so. If you take a broader view of what constitutes “enjoyment,” though, it’s possible to view the act of taking a pass on cookies as something other than “self-denial” too. Taking a pass on the cookies permits you to get in better shape. That brings pleasures of its own. So taking a pass on cookies too need not be viewed as an act of “self-denial.”

No one practices self-denial just for the sake of practicing self-denial. Self-denial is always practiced for the purpose of achieving some greater enjoyment. Even monks take vows of chastity, obedience, and poverty in the hope of securing the pleasure of eternal life in heaven.

Self-Denial Advertisement #3 — It’s Empowering to be Able to Shift the Enjoyment of Money into other Time-Periods.

It’s never really about self-denial. That’s a help, isn’t it? Just knowing that saving is never really about self-denial makes it sound a bit easier to pull it off, doesn’t it?

It depends. What is saving really about? Answering that question should help you determine whether saving is for you or not.

Television Commercials Affect Spending Decisions

Saving is about shifting the enjoyment of money into time-periods other than the present. If you live paycheck to paycheck, you take whatever fun you can get from each dollar you earn at the time you earn it. If you save, you spread out the enjoyment into various different time-periods.

That puts saving in a different light, doesn’t it? Saving is a strategic act. Saving is a way for you to do more of the things you want to do with your life. In circumstances in which the best value proposition comes from spending your money immediately, you do that. In circumstances in which the best value proposition comes from deferring the spending of your money, you do that. It’s a can’t-lose proposition.

The saving option is an empowering option. Your money would be worth less to you if you did not possess the option to defer the act of trading it for life-enhancing goods and services.

Self-Denial Advertisement #4 — The Benefit Provided by Spending Diminishes as the Amount Spent Increases.

Say that you won $1 million in a strange sort of lottery that included a requirement that the money awarded be spent in a single year. Would you obtain as much enjoyment from the $1 million as you would from a $1 million prize that could be enjoyed over any time-period you pleased? You would not. One vacation in a year is great fun. Two or three vacations in a year are fun. The eighteenth in a string of vacations taken one after another is a bore.

By spreading out the spending of your money, you obtain more enjoyment from your money. That’s what saving is all about. Saving is a means of enjoying life more than you could have hoped to enjoy it if you did not save.

Self-Denial Advertisement #5 — Money Does Not Give Enjoyment Only at the Time It is Spent.

Let’s consider an example of how shifting spending into different time-periods increases the life enhancement provided by the dollars that come into your possession.

You’re in college. You have lots of friends. The work you do (attending classes and studying) is fun. You are young. You are in good health. An uncle dies and leaves you $10,000. Should you spend it or save it?

There is no one right answer. There are lots of factors that need to be considered. As a general rule, though, I would argue against spending the money.


There are no doubt things that you could spend the money on. You might not have a car. Spending the money to purchase a car would not be a foolish use of it. As a general rule, though, you are better off continuing to do without a car for a bit and saving the money. You have lots of Fun Units coming into your life while you are in college. Don’t gild the lilly. You’ll still enjoy a new car when you graduate. Buy it then and it will provide more of a pick-me-up.

Even if you defer the car purchase, you will obtain some enjoyment in the immediate time-period from the inheritance. You will enjoy knowing that you have a new car in your future. Money does not provide enjoyment only on the day it is spent. It provides anticipatory enjoyments too. Those who save partake much more in anticipatory enjoyments than do those who do not save.

Self-Denial Advertisement #6 — Spending That Is Put Off Is Spending that is Twice Enjoyed.

Did you ever get so caught up in a project that you skipped a meal? How did the food you had after the skipped meal taste? Better than it would have tasted had you not skipped the meal, right?

It works that way with spending. If you put it off, you enjoy it more. One of the big problems of modern life is that we have such a flood of goods and services coming into our lives that we rarely need to do without. Doing without is one of the great pleasures of life. It can be overdone, to be sure. I am not suggesting that you become a miser. An occasional experience of doing without can be highly rewarding, however.

You want a big-screen television. You worry that you should be saving the money instead of spending it. Perhaps the best answer is a middle-ground. What if you elected to make a deal with yourself to buy the big-screen television, but only after the passage of a year’s time?

Spending Too Much

There are several things that might happen. One, you might decide after doing without it for a bit that you don’t really want a big-screen television all that much. In that event, you would enjoy the rewards of saving without experiencing any feeling of self-denial. Two, prices might come down. That’s an obvious plus for you. Three, the manufacturer might come out with a new version of the television screen with benefits not included on the one you first considered buying. That’s another obvious plus. Four, you might end up buying the television at the end of the year and enjoying it that much more because you held off for a bit. Holding off makes the eventual purchase more special.


Self-Denial Advertisement #7 — Spending Has Extra Power at Times of Disappointment.

You lose a job. You feel defeated. You’d like to take a week at the beach to get your spirits up. You can’t! You have no money coming in.

What if you had saved in anticipation of such an event? Then you could take the week at the beach without so much worry about money questions. That might be a vacation that does you a lot of good. It might clear your head enough to cause you to pursue an entirely new career direction. That sort of vacation might represent an outstanding long-term value proposition.

Saving Too Much Is a Big Problem

The Idea that Saving Too Much Is Not a Problem Reveals a Deep Flaw in the Old Money Management Model.

Most people think of financial freedom as a number. “When I have x number of dollars saved, I can retire.”

Saving Too Much Is a Mistake

It doesn’t work like that. If it worked like that, the x number would be the same for all of us. That obviously is not how it is. Some of us feel that we need to save x to attain financial freedom, some of us feel that we need to save y, and some of us feel that we need to save z.

How do we come up with these numbers? We look at how much we are earning today and then we estimate how much we think we will be able to save by the time we want to retire. Whatever saving number it seems possible to achieve without too much strain is the number we choose as “required.”

There is no required amount. If you were willing to live in the way that people in third-world countries live, you could declare yourself financially free today. If you were to adopt Bill Gates’ retirement desires as your own, you would never be able to retire, even if you saved every penny until you reached 100 years of age.

The amount that you need to save to be able to retire is not a requirement imposed on you. It is a choice. You decide how much you need to save to attain financial freedom.

It’s a choice you make by weighing multiple variables. Your desire for a comfortable standard of living presses you to choose a big number. Your desire to save the amount chosen without too much struggle presses you to choose a low number. The number you choose is a compromise generated by a weighing of the pros and cons of choosing higher or lower numbers.

The purpose of this site is to help you make better-informed choices. It does not make sense to force particular choices. Discussions of force do not belong in articles posted to this site.

How do we evaluate whether you are spending too much each year or saving too much each year? By determining whether the choices you make are in line with your particular life goals and with your particular financial circumstances. Given the realities that prevail, there is an ideal amount of saving that applies for you. If you save less than that, you are saving too little. If you save more than that, you are saving too much. It is just as much a failure to manage your money well for you to save too much as it is for you to save too little. Both variations from the ideal cause a diminishment in the value proposition you obtain from the money you earn.

It's Spending That Makes You Rich!

The idea of saving too much is rarely discussed in the conventional literature. The old money management model (the Sacrifice Saving model) is all about forcing saving. In a force-based model, it is not possible to save too much. Saving is good and the more of that good that can be obtained, the better.

I reject the old model as unrealistic. The purpose of money management is not to induce saving. It is to induce a good balance of spending and saving.

Where you begin an analysis often determines where that analysis takes you. The old model begins with the idea that saving too much is not possible. I think it would be fair to say that that model has failed us. The purpose of this article is to explore how beginning with the fallacious idea that saving too much is not possible leads you to a bad place.

No One Is Fooled by the Idea that Saving Too Much Is Not a Problem.

The old money management model seeks to force us to save. It doesn’t work. You might have noticed.

Why doesn’t it work? Why is it that the advice we hear from hundreds of “experts” is so terribly ineffective?

It’s because the model does not make sense. Most of the saving advice we see in books and magazines and web sites does not make sense. It possesses surface plausibility. But it does not get the job done; it does not persuade many to save. What’s up with that?

What’s up is that people have learned to tune out the conventional saving advice. People are not dumb, people are smart. People know on a deep level (even though they rarely articulate the thought) that saving too much is a bad idea. There is a b.s. detector present in all of our brains that filters out saving advice rooted in the idea that saving too much is not possible. We know from our life experiences that this is nonsense and that causes us to be more than a little suspicious of any money management model that puts forward such an idea.

The experts say: “Saving good, saving good, saving good.” We think: “yeah sure, yeah sure, yeah sure.” We do not believe what we are told by most money advisors because we cannot make sense out of what we are being told by most money advisors.

Sacrifice Saving Doesn't Work

For saving advice to work, it must make sense. The idea that spending is bad and saving is good does not make sense, it does not line up with our personal life experience. The idea that there is a right amount to save, given our particular life goals and our particular financial circumstances, does make sense. Once you accept that saving too much is possible, all sorts of doors open to you.

Saving Too Much Means Passing Up Opportunities.

My favorite money management saying is: “It’s Spending that Makes You Rich!” Those six words get to the heart of why it is that saving too much can be such a terrible mistake.

If the goal of money management were to achieve the cheapest version of financial freedom possible, we all would do without just about everything, attain financial freedom at age 30, and live in huts the rest of our lives. The reality is that money management is life management. We want to live! We want to live more than we want to be financially free. Financial freedom appeals, but fortunately for us we are all too smart to fall for the idea that financial freedom comes first. We want financial freedom on our terms.

That’s why I say that financial freedom is a process, not a number. Say that you worked through some numbers this weekend and determined that you need $1,000,000 to declare yourself financially free. Then say that on Monday an angel came down from heaven and handed you the $1,000,000. Would you then be financially free?

Probably not. Once you had the $1,000,000 in hand, your idea of what financial freedom requires for someone in your circumstances would change. You would rework the numbers the following weekend. You would elect to pursue a higher level of financial freedom that would require savings not of $1,000,000 but of $1,500,000. The angel’s gift would have brought you closer to the goal. But it would not have taken you all the way home. The financial freedom goal is an ever-changing goal and the way in which the goal is pursued influences the future shaping of the goal.

It’s a process. You finish school. You make note that you need to pay rent each month to be able to sleep in a nice apartment. You apply for a job, and secure one. You earn more than you need just to pay for the apartment. You put a down-payment on a house. You get a raise. You ask a Cool Girl to marry you. You have snoopsters. You fall deeply in love with them. You work harder. You get another raise. And so on and so forth, forever and ever, Amen.

That’s reality. That’s how it happens in the real world. It’s a mistake to think of working and saving and investing as entirely different subjects. They are related. Earning more makes saving easier. Saving more makes investing more important. Investing well eases the pressure on you to earn by working. It’s a circle of life/money management. Consider any of the numbers generated at any of the points on the circle out of context with the others, and you make a muddle of things.

Spending Generates Compounding Returns Too

Saving doesn’t just buy freedom. It also buys opportunity. Fail to spend on a nice suit when you go to that job interview, and you pass up the opportunity to do more rewarding (both financially and otherwise) work. Fail to spend on a nice ring for the Cool Girl, and she might need a day to think over your proposal (not because she’s a gold digger, because she doesn’t want to wake up one morning and find herself in bed with the Grinch). Fail to spend on Legos for those snoopsters and they’ll never give you a minute’s peace when you’re trying to do all that dumb stuff that Dad does on his computer.

Saving buys opportunities. Saving too much means passing up opportunities. Saving too much hurts you in serious ways.

Saving Too Much on the Wrong Things Discourages Saving the Right Amount on the Right Things.

Your friend asks you to join him on a trip to see the Orioles. You say “no” on grounds that the money is not in your budget. It ends up being a boring Sunday. Somewhere in the back of your mind you begin wondering if this saving business is all that it is cracked up to be.

Effective saving is life-affirming. Effective saving is fun. If your saving effort is generating doubts as to the wisdom of saving, you are going about it wrong. When you are going about it right, each new act of saving makes you thirst after more opportunities to turn on the juice. Saving should beget saving. If saving is begetting regret, you need to change the way you save.

I’ve said “no” to Orioles games. I’ve said “yes” to Orioles games. The idea is to say “yes” when the value proposition is there and to say “no” when the value proposition is stronger elsewhere. How do you learn how to assess value propositions effectively? Through experience. You learn by doing.

If you are following a saving model in which saving is forced, you are not comparing value propositions. You are not learning how to make good choices. This is the most important of money management skills. You must develop this skill to attain financial freedom early in life.

If you accept the idea that there is no such thing as saving too much, you are not comparing value propositions. You are deciding up front (as part of your choice of a money management philosophy) that saving is superior to spending. You are cutting out the comparison of value propositions that otherwise would over time turn you into one of the world’s great savers. Don’t do it!

Maximizing Fun Units

I’ve give you an example of the sort of thing that you might learn by comparing value propositions. You might learn that you get a major kick out of going to one Orioles game per Summer, but that the value proposition heads south after that. If that’s so for you, then you are leaving life enhancement on the table to attend fewer than one Orioles game per Summer or more than one Orioles game per Summer. For you, failing to spend the money required to attend one Orioles game per summer is saving too much.

Saving Too Much and Spending Too Much Are Two Sides of a Single Coin.

People often criticize “mindless spending.” How often do you hear people find fault with “mindless saving?”

The two phenomena are different sides of a single coin. It is not spending that is bad, but mindlessness that can make it bad. Mindlessness can make saving bad too.

I received an e-mail today from a community member who is seeking to turn things around and become an effective saver for the first time in her life. She asked me for some suggestions on what to do. I pointed out that many saving experts would give her a list of tips with a call to get working on them. I said that that sort of thing does not produce results, in my experience. My suggestion was that she make a promise to herself to revisit the site on four future occasions and to spend one hour reading the articles posted at it on each of these occasions.

Why the low-key suggestion? Because what matters is one’s attitude toward money questions. There are no steps that you can take in a short amount of time that are going to make a big difference in the long run. It’s how you think about spending and saving that makes a big difference in the long run. Small changes in attitude can amount to large amounts of accumulated wealth, given a bit of time to work their magic.

The Dollar Value of Desire

Did you ever see someone trying to lose weight become a fanatic for a week or two or three, eating no snacks whatsoever? It doesn’t work. The person following the strict diet gets sick of it in time and gains the weight back. But there are people who succeed at long-term weight loss. They do it through changes in attitude about eating and exercise. When their new ideas become habits, they have the game won.

To become an effective saver, you need to come to love saving as much as you love spending. You don’t do that by saving too much. You do that by becoming more thoughtful about the trade-offs involved in choosing either spending or saving and by developing the skills needed to save just enough.

Ineffective money management is a vicious cycle. You can bounce from saving too little to saving too much and back again dozens of time. You don’t want to do that. You want to spend just the right amount and save just the right amount. The opposite of spending too much is not saving too much. The opposite of spending too much is saving and spending just the right amount.

What Savings Goal Really Turns You On?

It’s the savings goal to which your money management efforts are being directed that determines whether your efforts will prove fruitful or not.

What Savings Goal Really Turns You On?

I have been studying how to save well since October 1991. I know the secret and there really is no point in wasting lots of blah, blah, blah on this. I might as well just tell you and be done with it.

Here goes.

The secret of successful saving is–

Wanting with all your heart, mind, and soul to become a freelance writer of non-fiction books.

Wait a minute. That’s dumb. That cannot be the secret! What’s the real secret?

Here’s the thing. Wanting to be a freelance writer really was the secret for me. That was what I wanted to do with my life. Once I came to see saving as my ticket to getting to do with my life what I wanted to do with it, saving was no longer a drag. It became a joy. Remember that Van Morrison song where he told us how he got stoned drinking a glass of water? That’s how saving was for me once I identified a saving goal that came from the heart. Once I began saving to make a shift to a freelance writing career, saving made me high.

Pursuing the savings goal of financing an old-age retirement is not going to make you high. That one is so boring it doesn’t make anyone high. Pursuing the savings goal of becoming a freelance writer of non-fiction books is probably not going to get your juices flowing either. Your juices respond to a different sort of savings goal than mine.

But there is a dream out there that can be achieved with saving that you would love to see become a reality. Identify that dream, make it your Passion Saving goal, and you are on your way to becoming the next of the world’s great savers!

I can’t identify for you the savings goal that most turns you on. That’s a fun project that you will need to tackle on your own. But I can provide you a list of some powerfully motivating savings goals that have turned a whole bunch of other people into some of the greatest savers in the world.

A Savings Goal of Intense Personal Concern

I first began writing about Passion Saving in May 1999, on the Motley Fool discussion boards. The community of savers that I connected with there was a group of wonderful, smart, and generous souls. May I introduce you to a few of them to give you an idea of the sort of savings goals that work in the real world?

Here’s a list of 20 of the greatest savers in the world, and the savings goals that helped make them become 20 of the greatest savers in the world. I’ve identified these savers by the screen-names they used for posting on the Motley Fool discussion boards.

1) “Krumbunny” saved to be able to shift to a career of pottery making;

2) “Bmullens” saved to be able to open a music store;

3) “Rjstandford” saved to buy farmland;

4) “Notlance” saved to craft woodwind instruments;

5) “Slinkyfool” saved to have time to learn new things, such as playing an instrument or gardening;

6) “Phantomdiver” saved to be able to leave her career in marketing and become a web designer;

7) “Duggg” saved to be able to mountain bike on weekdays, when the trails are less crowded;

8) “Spl241” saved to open an ice-cream store;

9) “Chilkatsally” saved to be able to spend the summer months with her three school-age children, taking her own three-month vacations from the usual thing;

10) “Pablum” saved to reduce stress in his life;

11) “Jesever” saved to acquire true job security, so she would be assured of not ending up like a friend of hers who was forced to beg for job interviews at age 50;

Middle-Class Dreams

12) “Biggalloot” saved to be able to work outdoors, with his hands, after years of being cooped up in an office;

13) “Foollala” saved to have more control over her work schedule;

14) “CFOFool” saved to have the time needed to be able to exercise and take better care of his health;

15) “Dory36” saved to be able to live on his boat;

16) “1HappyFool” saved to become a wood farmer and live far away from urban job centers;

17) “Wanderer0692” saved to be able to spend more time with his wife and children;

18) “Cmorford” saved to be able to run his own microbrewery;

19) “Ubermensch” saved to commit his life to work he personally found meaningful, not assignments handed to him by a corporate employer; and

20) “Arrete” saved to be able to avoid having to set the alarm clock on mornings on which she felt like sleeping in.

It’s why you save that determines whether your saving effort is successful or not. Save for a savings goal of intense personal concern, and you really will save.


Saving for Retirement Is a Dumb Idea

Saving for retirement is a dumb idea because it takes all the fun out of saving.

Saving is a great idea.

The Money Bridge

Saving buys financial freedom. We all want to be more free. So what’s not to like about the idea of saving?

What’s not to like is that planning a retirement when you are in your 20s or 30s or 40s or early 50s is boring. Who wants to be thinking about the day she grows old when she still has plenty of high-energy years left to her? Combine the idea of saving with the idea of retirement and you take all the fun out of it.

Take all the fun out of it and saving becomes one of those nice ideas that rarely inspires action in the real world. Perhaps you’ve noticed.

Saving for retirement is a dumb idea because it has a poor track record.

We earn more money than our parents or grandparents. We save less.

I wonder why.

It’s because the old money rules do not work. They sound plausible. But they do not produce good results in the real world.

My thought is that, instead of continuing to bang our heads against the wall trying to make the old rules work, we should try something different. Maybe the idea of saving for retirement is not all that it has been cracked up to be. Maybe the reason why so many of us have a hard time managing our money effectively is that the conventional money management ideas just flat-out do not make sense.

They don’t work. That much is for sure. Taking a quick look at the national saving rate tells us that much.

Saving for retirement is a dumb idea because it encourages you to think of saving as something that must be forced.

The most popular saving idea of all time is to pay yourself first, to set aside 10 percent of your pay for savings before even thinking about what you could spend it on.

That works for lots of people. Most effective savers swear by this rule.

I don’t. I think it is a fine rule for those getting started. Paying yourself first really does produce results in many cases. So I cannot entirely knock it.

Saving Strategies

I don’t like the obvious implications of the “Pay Yourself First” rule, however. The suggestion is that saving is something painful, like going to the dentist, and that only those who force the issue can expect to be able to save anything.

That’s not been my experience. I saved nothing for the many years in which I assumed that “Pay Yourself First” was the way to go. Once I began pursuing saving goals other than an old-age retirement, I fell in love with the idea of saving to build a life bigger and better and bolder than the life I had been living before doing so. I never had to force myself to save after making that discovery. I save for the same reason I spend, because I like the benefits it brings to me.

Forced saving doesn’t just place a floor on saving. It places a ceiling on it too. You’ll save more if you save because you love what it can do for you than you will if you save because you feel you must.

Fear sometimes produces quicker results than love. Love is more powerful in the long run.

Saving for retirement is a dumb idea because it encourages you to think of spending as something bad.

Saving for retirement must be forced because no one in his 20s or 30s or 40s or early 50s really cares about retirement all that much. We all want to retire someday. For just about all of us, planning our retirements is Priority Seven or Eight in a life that permits sustained attention only to Priorities One through Five or Six. Saving for retirement is a bad idea because saving for retirement is saving that never gets done.

So those saving for retirement must force themselves to save. That means that they must try to persuade themselves that spending is yucky, not fun, wasteful.

Is it?

Sometimes. Generally not. Most of the goods and services we buy in this Consumer Wonderland of ours offer a pretty darn amazing value proposition. My boys truly enjoy their Star Wars Lego sets. I truly enjoy my high-speed internet connection. My wife truly enjoys the food she pays a little extra money for at Whole Foods.

Spending is not generally wasteful. Tie the success of your saving plan to persuading yourself that it is, and you have rooted your saving plan in a lie. Not good.

Why not just acknowledge that spending is wonderful and that saving is wonderful too? That works when you are saving because you love freedom, not because you fear not being able to retire in your old age.

Saving for retirement is a dumb idea because it takes your focus off of all of the more exciting saving goals that you could be pursuing instead.

I refer to saving as making purchases at The Freedom Store. I like putting it that way because it reveals how the purpose of saving is to obtain the power to live the life you truly want to live.

Saving for Retirement Is a Dumb Idea

Save and you can stay home with your kids when they are young. Save and you can start your own business someday. Save and you can retire early. Save and you can free yourself from worry over when you are going to see the next economic recession or the next corporate restructuring.

Saving is not a negative, the denial of spending. Saving is a positive, the purchasing of freedom.

It’s only because we save for retirement that we think of saving as a negative. Save for retirement and you are saving not for the “You” that exists today, but for the one who will be coming into existence someday one or two or three decades from today when you turn 65.

Sure, you want to take care of that guy or gal. But taking care of that guy or gal should not be the primary saving goal of the guy or gal that you are today. You should be saving for what it can do to enhance your enjoyment of life within five years. Do that consistently and there will be money to take care of the age-65 version of You when he or she arrives on the scene.

Saving for retirement is a bad idea because the reasons why this became the conventional saving goal no longer apply.

If saving for retirement is so dumb an idea, how did it ever become so popular?

In the old days, saving for retirement was an exciting idea. There was a time when an old-age retirement was a luxury. Most people stopped working only when they became too old and weak to continue. In those circumstances, saving for retirement made sense.

Today, we can do better. We can use saving to enhance our enjoyment of life in the here and now and then to build old-age retirements as well. The idea of retiring at age 65 no longer provides much of a thrill. So saving for retirement is no longer an effective saving goal.

Saving for retirement is a dumb idea because it is a risky approach to money management.

Saving carries risk.

If you deny yourself a dinner with friends, you might miss out on a great business opportunity that they would have shared with you over a relaxed dinner. Deny yourself a vacation and you might truly go berzerko at work instead of just coming close to doing so. Deny yourself good health insurance and you might die earlier than you would have had you directed more money to keeping up your health.

The idea is not always to opt for saving any more than it is always to opt for spending. The idea is to compare the benefits of saving and spending and to choose the option offering the stronger value proposition.

It’s hard to do that when the benefits of your saving effort will not appear until two or three or four decades into the future. Saving for retirement is saving blind. It increases the chances of choosing the less appealing value proposition. It’s a risky way to go about making money allocation decisions.

Saving for retirement is a dumb idea because it goes against human nature.

Saving Myths

You meet with the person putting together your mortgage papers. She tells you that, as part of its effort to serve you better, the bank has come up with an exciting new mortgage product. You make monthly payments for 30 years, just as was always done under the old approach. But you don’t move into the house being paid for until the 30 years of payments have been completed.

How excited are you about this idea?

That’s a good indication of how excited you get thinking about the idea of saving for retirement and not getting to enjoy the benefits until 20 or 30 or 40 years into the future. A limited amount of deferred gratification is one thing. Deferring gratification for 30 years is something else altogether. That’s an approach that goes against human nature. And we wonder why the saving rate is so low?

Saving for retirement is a dumb idea because there are millions of others doing it.

When you hunger for a juicy steak, you go to a restaurant known for putting together a sizzling steak. When you hunger for Double Chocolate Decadence, you head off to a restaurant famous for its desert menu.

How often do you make reservations at a place that advertises that “There’s Food Available Here.”

Not that often, eh?

For good reason. We fall in love with particular persons, places and things. Pursue a saving goal that is of intense personal concern to you and you alone, and you will become a saving madperson. Save for the same reason for which millions of others are saving, and you will have a hard time working up the enthusiasm to do much of it.

You are a unique person. You need a unique saving goal.

Saving for retirement is a dumb idea because it confuses you in your thinking on lots of other money management topics.

Poor savers lack willpower.


Not right.

Thinking Outside the Box on Money Management

You have the willpower needed to hold a job. Otherwise, you wouldn’t be reading an article about how to save effectively. If you have the willpower needed to hold a job, how is it that you lack the willpower to save?

I didn’t save for the first 35 years of my life. Then I discovered the idea of saving for things that mattered to me and I began saving like a mad person. It wasn’t an injection of willpower that made the difference. A lack of willpower was never the problem.

Saving for retirement is an artificial way to save. Pursue that crazy saving goal and you are going to engage in all sorts of crazy behavior and you are going to come up with all sorts of crazy theories to explain the crazy behavior. Save the way you spend and you escape the craziness. Save in a way that makes sense and all of your money choices begin to make a lot more sense.

You don’t spend for retirement, do you? You spend for what spending can do for you now, in the near-term future, and in the long-term future too. That’s how you should save.

You should think about retirement, yes. It should always be a factor in your planning. Financing an old-age retirement should not be your dominant saving goal. Save to become free. Save to live. Save in your 20s and 30s and 40s and 50s for the things that it can do for you not in your 60s and your 70s and your 80s and 90s but for what it can do for you in your 20s and 30s and 40s and 50s.

Do that, and you’ll become a highly effective saver. Become a highly effective saver and guess what? You’ll have money when you need it for an old-age retirement too.

Rob Bennett’s Favorite Saving Advice Sayings

Rob Bennett’s Favorite Saving Advice Sayings #1 — It’s Spending That Makes You Rich!

Saving Advice Sayings The strategy usually used to encourage saving is to suggest that spending is bad. I don’t buy it.

Rob Bennett’s Favorite Saving Advice Sayings #2 — Save the Way You Spend

Many people who say that they don’t know how to save put considerable effort into making informed decisions to buy cars or houses or televisions or vacations. They are comparing value propositions. That’s what you do when you elect to allocate money to spending or to saving.

Rob Bennett’s Favorite Saving Advice Sayings #3 — Retire Different!

Retirement is not an all-or-nothing proposition. We overcome paycheck dependence in stages as we reach higher levels of financial freedom. You don’t need to stop working to assert greater control over your life by, for example, taking work that pays less but provides more fulfillment. And you never need to give up the joys of work altogether.

Rob Bennett’s Favorite Saving Advice Sayings #4 — If Saving is the Right Thing to Do, Why Does it Make You Feel so Cheap?

We use words like “miser” to describe savers. We characterize spenders as “generous.” That’s a problem.

Rob Bennett’s Favorite Saving Advice Sayings #5 — Pay Yourself Last

The advice to “Pay Yourself First” really does work; it has helped a lot of people advance from being non-savers to being savers. The problem with forced saving is that it puts a ceiling on saving as well as a floor. The world’s most effective savers save only when they see a strong value proposition in doing so (which is often).

Rob Bennett’s Favorite Saving Advice Sayings #6 — Putting the Personal Back into Personal Finance

The purpose of saving is to enhance your enjoyment of life. You don’t get to where you want to be by studying compounding tables (at least not at first — that sort of thing comes later). You get to where you want to be by identifying ways in which saving can help you achieve the Life Goals that are most important to you and you alone.

Rob Bennett’s Favorite Saving Advice Sayings #7 — What Color Package Will You Soon be Carrying Home from The Freedom Store?

Rob Bennett on Saving Money We think of saving as not spending. No. Saving is a positive. We save to attain The New Luxuries — plentiful free time and soul-satisfying work.

Rob Bennett’s Favorite Saving Advice Sayings #8 — We’re Practical Dreamers and That Makes All the Difference

I have a distaste for the excessively practical; dreams are the spice of life. To dream aimlessly is worse than not to dream at all; it wastes time, and, in many cases, it’s outright dangerous. It’s the tension between the practical and the dreamy that energizes the Passion Saver.

Rob Bennett’s Favorite Saving Advice Sayings #9 — Pay Increases Are Not Enough

If your salary goes up steadily but you are not enhancing your skills or developing new contacts or adding to your level of financial freedom, you are setting yourself up for a major hurt. You are becoming more dependent on a paycheck with each passing year rather than less so.

Rob Bennett’s Favorite Saving Advice Sayings #10 — The Last Days of Paycheck Dependence

It’s human nature to complain about how tough we have it. There’s plenty to complain about in the modern world. I don’t think that those of us who live in the modern industrialized economies can rightly complain too much about our buying power, however. The increase in middle-class buying power is one of the most positive developments of the past century. We need to recognize how good we have it (on this point, at least) before we can hope to put our buying power to its best possible use.

Rob Bennett’s Favorite Saving Advice Sayings #11 — Survival Spending Is Like Sacrifice Saving

We think of spending as exciting. Is it really? Some types of spending are not exciting at all. How turned on do you get by the idea of paying the electric bill? Spending can be every bit as boring as saving. It is the nature of the item to which the spending (or saving) is directed that makes the difference.

Rob Bennett’s Favorite Saving Advice Sayings #12 — Luxury Spending Is Passion Spending

Rob Bennett on How to Achieve Financial Freedom Earily in Life It’s when we buy things that we don’t really need (vacations, computers, sun rooms, sports cars) that spending becomes exciting. Seeing this helps you to understand why Passion Saving works and Sacrifice Saving does not. Saving on a need (to finance an old-age retirement) is boring. Saving for a more free life in the years before you turn 65 is exciting.

Rob Bennett’s Favorite Saving Advice Sayings #13 — Saving: New and Improved!

Spending and saving are alternative money choices. The appeal of spending grows greater every year as new and exciting products and services are brought to market. Saving doesn’t stand much of a chance for those seeking to attain the same boring saving goal (the financing of an old-age retirement) as did their parents and grandparents.

Rob Bennett’s Favorite Saving Advice Sayings #14 — Where Have All the Productivity Dollars Gone?

Many see an age-65 retirement as out of reach. Many others are pursuing plans to retire in their 40s or 50s. Something’s up. What’s up is that increases in productivity have opened up amazing opportunities to middle-class workers but these opportunities have been frittered away as the result of our failure to develop Life Plans. Good things happen to those who plan for them.

Rob Bennett’s Favorite Saving Advice Sayings #15 — Money Is Time

Our bosses put it the other way. They tell us that to waste time is to waste money. When we go home, we need to keep in mind that the opposite is just as so. You trade control over the hours of your day to an employer to earn the money you need to live. Waste that money and you require yourself to give up control of more of those hours than otherwise would have been necessary. Not good.

Rob Bennett’s Favorite Saving Advice Sayings #16 — A Thinking Person’s Lottery Ticket

Rob Bennett on Passion Saving

What would you do if you won the lottery? Would you really spend the money on luxury purchases? Or would you use the financial freedom obtained to do different things with your life? Effective money management permits you to call the shots in your life years sooner than would otherwise be possible.

Rob Bennett’s Favorite Saving Advice Sayings #17 — The Budget That Learned to Say “Yes!”

Think of your budget as a friend that opens up opportunities for you to do the things you want to do instead of as a schoolmarm shaking her finger in your nose and you’ll stop hating the idea of keeping a budget so much.

Rob Bennett’s Favorite Saving Advice Sayings #18 — From the Clark Kent of Money Management into the Superman of Saving

Those who become motivated to save don’t increase their saving rates a small bit. They increase them dramatically.

Rob Bennett’s Favorite Saving Advice Sayings #19 — What If You’re Married to a Job You Don’t Really Love?

Rob Bennett on How to Get Rich Sometimes it makes sense to stick to a boring job. Sometimes it doesn’t.

Rob Bennett’s Favorite Saving Advice Sayings #20 — Death is Real

We all get only so many years. We have to get up and make our lives shine and it takes money to do it. That’s the true reason why you want to save effectively. You want to practice good money management because the sand is slipping through the hourglass.


Ten Unconventional Saving Money Tips

Please click here to view my 7-minute interview with ABC News concerning these ten unconventional but powerful saving money tips: Rob’s Interview with ABC News.

Unconventional Saving Money Tip One: Focus on getting over the $100,000 hump.

Saving your first $100,000 is hard. The trick is not letting the difficulty of the task become disheartening. The encouraging word from the world’s great savers is that the second $100,000 comes easier, and the third $100,000 easier still.

Why? Your income goes up as you age. You won’t always be earning an entry-level wage. On top of that, once you have $100,000 put away, you begin to notice that your investments are producing an income each year separate from the income you earn from the work you do. The compounding returns phenomenon is no longer a theory, but a personal reality. Saving makes sense.

Unconventional Saving Money Tips You have to get over that $100,000 hump, though, to experience this phenomenon of saving getting easier over time. So don’t focus in the early years on saving all that you need to retire. Make it your goal just to get over the $100,000 hump. The long-term effect will be more positive than you would intuitively expect to see come from saving that relatively small (in comparison to the amount needed to finance retirement) amount.

Unconventional Saving Money Tip Two: Add back in the income tax when determining how much it costs you to buy things.

The sales tag on the leather jacket you want says that it costs $1,000. You know to add in the sales tax to determine the full price, which is perhaps 5% higher, or $1,050. But even that is not the true full price.

You can’t buy the leather jacket by earning $1,050. You need to have $1,050 in take-home pay to buy it, and that means that on a pre-income-tax basis, you need to earn a good bit more, perhaps $1,250.

It’s true, of course, that the money that goes to income tax is not yours to spend or save. Refraining from buying the leather jacket will not get it back for you. The other side of the story is that paying income tax hinders your effort to win financial freedom early in life as much as paying sales tax. Mentally adding back the income tax helps you appreciate how many hours of labor it takes to obtain a jacket with a nominal price tag of $1,000.

Unconventional Saving Money Tip Three: Use the Multiply-by-25 Rule to determine how much it takes to finance for life each of your spending categories.

Your ultimate saving goal is to become financially free–to be able to cover your costs of living without needing to work for money. If you can earn a 4 percent annual real return on your investments, you can determine the amount you need to save to create a fund covering that expense for life by multiplying the annual cost by 25. If you spend $40 per year on magazines, you need to save $1,000 to forever free yourself from needing to work to pay for magazines.

Please see the separate article at this site providing more detail on the third of our money saving tips — the Multiply-by-25 rule.

Unconventional Saving Money Tip Four: Translate dollars spent into hours worked to earn those dollars spent.

“I don’t care too much for money, money can’t buy me love,” Paul McCartney once observed. It’s an important point, but not a particularly helpful one to those seeking to win financial freedom early in life.

Money Ideas

Money in itself means nothing. It’s little green pieces of paper. It is what money stands for that means something. When you go to work, you are trading the power to control what you do with the hours of your days to an employer in exchange for those little green pieces of paper. To save well, you need to keep in mind what it is that is at stake when you spend some of those little green pieces of paper. The real cost of buying stuff is losing power over what you do with your time.

If you earn $25 per hour, a $50 expense is really the loss of control over two hours of time. Money can’t buy you love in a direct sense, but not spending money can buy you back control of your time, and you can then use your time to do things you love.

Unconventional Saving Money Tip Five: Pursue short-term saving goals.

Why do you want to save money? If your answer is “So that I will be able to retire when I turn 65,” the odds are good that your saving efforts have been less than successful. If you are 35 today, you are trying to do something that will not produce a payoff for 30 years. Name one other thing you have ever done in life for which you did not expect to see a payoff for 30 years. It is unrealistic to expect such a long-term saving goal to motivate you to save much today.

Break the long-term saving project–to achieve complete financial freedom–into a series of smaller goals that you are far more likely to act on in the near future. Save to pay off your mortgage.  If that too is too big a goal to get your head around, save to pay off one-third of your mortgage. Or save to have enough to start your own business in the event that someday that’s something you decide you want to do. Saving goals that work are saving goals that can be achieved within five years.

Unconventional Saving Money Tip Six: Pursue goals of intense concern to you and you alone.

Have you ever had the experience of enjoying a nice dinner out with your spouse or a good friend, commenting that you were too full to have dessert, and then found yourself wavering when the waiter came by with the dessert tray? If you love cheesecake, and you see that this place makes a good cheesecake, you want some, whether in theory it is a good idea for you to order some on this particular occasion or not.

You need to want to save the way you want to eat cheesecake (if you love cheesecake), or the way you want to eat a chocolate brownie (if you are a chocolate brownie lover), or the way you want to eat an apple cobbler (if you are an apple cobbler lover). A general desire to save is like a general desire for desert — it’s not compelling enough to inspire action.
Think Outside the Box

I became a good saver when I began saving to free myself to pursue a career of writing non-fiction books. That was my cheesecake saving dream. It wouldn’t work for you, but something will. The trick to becoming an effective saver is identifying that something, the saving goal that provides you with the motivation needed to get the job done.

People trying to sell you stuff always try to hit your emotional hot buttons with their sales pitches. They do this because it works. It works on the saving side too. To save well, you need to direct your money management energies to the pursuit of a goal that hits your emotional hot buttons.

Unconventional Saving Money Tip Seven: Don’t save in pursuit of a general desire to “get ahead” or to “have something to show for your years of work” or to “do the responsible thing.” Save in pursuit of a particular change that you want to make to enhance your enjoyment of life.

I was talking to a reporter today about what a worker should say when a collection is being taken to pay for a gift for the boss’s birthday and the worker does not want to make the contribution. I said that the worker needs to put forward a specific alternate use of the money to which he intends to direct it instead. For example, the worker might say that he is saving to have the money needed to travel to a family reunion scheduled to take place in three months.

Reporters often begin their newspaper and magazine articles with anecdotes. Why? Because the specifics of a story possess an emotional pull that abstractions do not. If you save “to be responsible,” you will not save. If you save because you want to attend a family reunion, and saving is the way to get there, you will.

Many people look askance at those who don’t want to make contributions to buy a gift for the boss’s birthday because the amount of money involved is small relative to what must be saved to finance a retirement. It is better to save for lots of little things over the course of a lifetime, just as you spend for lots of little things. To make saving matter, direct your mental energies to the small things that saving can do for you at all stages of life instead of the big dramatic thing (financing an old-age retirement) that it will do for you only once near the end of your active years.

Unconventional Saving Money Tip Eight: Stop thinking of saving as something that only misers do well.

I would rather be a spendthrift than a miser. It’s not great to be a spendthrift. Butit’ downright sick to be a miser. That’s my take.

So I was not able to save well so long as I thought of saving as a miserly thing to do. It was when I saw that it was through saving that I would become able to live my dreams that saving became a passion for me.

Tongue Out at Conventional Saving Advice

There’s nothing small or cheap or sick about effective saving. Not if you’re doing it right. Save for the right sorts of reasons–life-enhancing reasons–and you will no longer think of saving as miserly. And then you will make the change from someone who talks about saving someday to someone who really does pull it off in the here and now.

Unconventional Saving Money Tip Nine: Don’t pay yourself first. Instead, pay yourself last.

Many people have found that the only way that they have been able to save anything is by paying themselves first. For many, saving happens when it is automatic.

Automatic saving is not good enough for those seeking financial freedom early in life, however. Automatic saving can only go so far. The usual rule-of-thumb you hear is to aim to save 10 percent of your income. With pensions disappearing and Social Security in long-term trouble, saving 10 percent of your income is probably not going to allow you to realize your dream of a comfortable early retirement.

The “pay yourself first” maxim is rooted in the thought that saving is something to be endured, like your least favrorite vegetable, and that you should aim to direct as little mental energy to the money management project as possible. That’s mixed-up thinking. Done in the right spirit, saving is fun. Your financial freedom plan is your plan for coming to live the life you want to live. So you should enjoy each step you take to implement it.

Much spending is good. Much spending enriches your life. You should not be aiming to mindlessly cut spending anymore than you should be aiming to mindlessly spend. The goal should be to spend when spending offers the best value proposition and to save when saving does. To do that, you need to evaluate the value proposition offered by each act of spending and save only in those cases when saving offers more bang for the buck. You need to pay yourself last (but often).

Unconventional Saving Money Tip Ten: Keep in mind that only a limited portion of your earnings is available for saving, and that the loss of any of those dollars to spending means giving up a significant percentage of your potential Freedom Dollars.

You are standing outside of a coffee shop considering a purchase of a $3 latte. You earn $50,000. So the amount at stake represents only a miniscule percentage of your pay. It doesn’t sound like that big a deal, does it?

Here’s the big deal. The $3 is a potential daily expense. If you get in the habit of spending $3 per day on coffee, the annual cost is more than $1,000. Let’s say that you save 10 percent of the $50,000 you earn–that’s $5,000. By taking a pass on the coffee, you would increase your annual savings by 20 percent.

I’m not anti-spending. I love to spend. I’m not even against the idea of buying premium coffee. There are times when this little luxury offers a fantastic value proposition. Financial freedom offers a great value proposition too, though. The purpose of the Passion Saving approach to money management is to highlight to the middle-class worker making use of it both the pros and cons of spending so that he or she can obtain the greatest possible value from each dollar that he or she earns.

My Best Money Management Tip — Pay Yourself Last

The most popular money management tip is to “pay yourself first” — that is, to save automatically and thereby insure that you really do save.

The reason why this advice has become so widely accepted is that most people find little appeal to the idea of saving money. If you think of saving money in much the way you think of eating your least favorite vegetable, it probably is true that making saving automatic will increase the amount you save.

Money Management Tip

There’s a downside to the “Pay Yourself First” strategy, however. Pay-Yourself-First Saving is forced saving. Pay-Yourself-First Saving is a money management approach for those who don’t want to devote much thought to money management.

Passion Savers are seeking to win their financial freedom early in life. Those seeking to win their financial freedom early in life need better money management strategies than the money-management-on-autopilot “Pay Yourself First” approach.

My best money management tip is to pay yourself last. That is, make a decision as to how much to save only after examining the pros and cons of spending and saving and determining which money allocation choice offers the most life enhancement for someone in your particular life circumstances and pursuing your particular life goals.

Saving is not always a good idea. You need to pay yourself last, only after assessing the competing value propositions of spending and saving, if you are to save in those circumstances in which saving offers the better value proposition and spend in those circumstances in which spending offers the better value proposition.

Consider the money management tips set forth below to gain an ability to distinguish the circumstances in which it makes sense to save and the circumstances in which it makes sense to spend.

Money Management Tip #1 — By saving significant amounts of money when you are young, you allow yourself to tap into the income-generating power of your savings to a far greater extent than you would be able to if you did not begin to save significant amounts of money until you were older.

Say that you are going to save $1 million before retiring at age 65. Say that you can generate a 4 percent real return on each dollar you save.

Imagine a theoretical possibility in which you saved the entire $1 million on the last day of your working life. You would obtain the benefit of $40,000 of earnings that you would not need to work to produce for as many years as you lived beyond age 65 (perhaps 20 or 30 years).

Now imagine a theoretical possibility in which you saved the entire $1 million on the first day of your working life. You would enjoy the buying power provided by $40,000 of earnings from the time you graduated school. If you adopted frugal money management habits, you would not need ever in your life to work for money!

Pay Yourself Last

Your personal circumstances will fall somewhere between those two theoretical extremes. You won’t have saved all that you are ever going to save on the first day of your working life and you won’t be able to save everything you need to save to be able to live without working for money if you wait until the last day of your working life to begin saving. The most important money management choice before you is to decide where on the spectrum of possibilities between the two extreme hypotheticals your personal money management strategy will place you.

To the extent that your money management practices cause your own situation to more closely resemble the save-it-all-early scenario, you will be able to live at the same level of comfort over the course of your life without generating as much income from the work you do.

Money Management Tip #2 — There’s a compounding returns phenomenon that applies to spending.

Those arguing in favor of the “Pay Yourself First” maxim often point to the compounding returns phenomenon as a big benefit to automatic saving.

The compounding returns phenomenon is real. Saving when you are young really does provide an amazing long-term benefit.

What often gets missed by proponents of the conventional money management strategies is that spending provides compounding returns too.

Say that you elect to spend money that might otherwise have been saved to travel and thereby to learn about foreign cultures. That learning experience provides you benefits throughout your life. It might help you get a job that you otherwise would have just missed out on. In cases like that, the financial benefits of spending when young can be great indeed.

Money Management Tip #3 — There is a point of diminishing returns to the life enhancement provided by spending.

When you haven’t had anything to eat for twenty-four hours, a hamburger tastes mighty good. When you have just finished your second quarter-pounder, the idea of unwrapping a third holds little appeal.

Each dollar of spending does not provide equal value. Some dollars provide an outstanding value proposition. Some spending adds little to your enjoyment of life.

Don't Pay Yourself First

Some spending even detracts from your enjoyment of life. Did you ever force yourself to go out to eat at a fine restaurant that you really were not in the mood to go to because it seemed an appropriate way to celebrate a special occasion? In those circumstances, you often find yourself wishing that you could just eat at home in front of the television, where you wouldn’t have to deal with parking troubles and a waiter that takes too long to bring your order and all the rest that goes with a bad dining experience.

When you pay yourself last, the goal is to spend up to the point at which one more dollar of spending yields less life enhancement than one dollar of saving, and then save the rest. There is no saving percentage that always works. In some circumstances, the best saving percentage is 5 percent of income. In others, it is 15 percent. In still others, it is 25 percent or more.

Money Management Tip #4 — There are certain kinds of fun you can only have when you are young.

If you miss out on experiences best enjoyed by the young while you are young, those experiences are lost to you for good. All the money in the world won’t allow you at age 50 to buy an opportunity to bond with your friends from college on a camping trip at a time of life when you are all facing similar excitements and fears over making your mark on the world.

There are some life experiences that cannot be valued in dollars-and-cents terms. Give those up due to a misplaced desire to “Pay Yourself First,” and you have made a poor money management choice, in my view.


A recent thread at the Vanguard Diehards discussion board explored both the risks and rewards of the popular “Pay Yourself First” money management tip and the “Pay Yourself Last” alternative endorsed here.


Money Management Tip #5 — There’s value in the peace of mind purchased by saving effectively.

The Money Allocation Moment Saving yields not only an income separate from the income you earn from the work you do. It provides peace of mind. Savers are in control of their fates to a greater extent than are those who fail to save.

The fact that it is hard to put a dollar value on the peace of mind gained by saving does not mean that that peace of mind does not offer as much or more life enhancement as do the goods and services you could have spent the same money on instead.

Money Management Tip #6 — Saving becomes a habit for those who engage in it regularly.

One big benefit of the “Pay Yourself First” approach to money management is that forced saving permits the saver to experience the joys of saving for himself or herself. We all regularly experience the joys of spending because we must do so if we are to eat and to visit doctors and to enjoy indoor comfort on the hottest of summer days. Those who don’t save don’t realize how much fun it can be. If they did force themselves to save at least a little, they probably would enjoy saving enough that saving would become a habit and in time they would come to save more.

Money Management Tip #7 — Accumulated savings comes in handy in a crisis.

Much of the happiness you enjoy today depends on your ability to continue earning the income you earn from the work you do. But your job is not secure in the modern-day economy.

Saving opens up options that permit you to deal with unexpected developments in effective ways. Savers are better able to start their own businesses. Savers are better able to take jobs that pay less but offer more in the way of personal fulfillment. Savers are better positioned to be able to remain out of work long enough to obtain a job offer that is truly appealing.

Money Management Tip #8 — There are risks attached to saving.

Spending and Saving in the Proper Proportions

We are often warned of the risks of not saving. Fail to save and you may not be able to provide for yourself when you are too old to work.

The risks of saving are not often noted. But they are real. Save, and you give up opportunities to do the things you could have done with your life had you spent the same amount of money instead.

Most of us earn larger incomes in our 40s and 50s than we do in our 20s and 30s. Presuming that there is one level of spending that provides us the greatest possible life enhancement, an argument can be made that we should be spending more than we earn in the early years of our careers when we do not earn enough to finance that level of spending from our earnings, and that we should be spending less than what we earn in later years of our careers when we earn more than enough to finance that level of spending.

I don’t advise young people to acquire large amounts of debt so that they can live at age 25 the lifestyle that they will be able to afford with the salary they earn 30 years later. But I do think that the possibility that you will earn more as you age is a factor that should be taken into account when crafting a Life Plan.

Money Management Strategy — What Really Matters Most?

Does income matter when pursuing a money management strategy?

Money Management Strategy A big income always helps, doesn’t it? The reality, though, is that having a big income is not the key to winning financial freedom early in life.

A worker earning the median U.S. income today (about $42,000) brings home a paycheck providing twice the buying power of her counterpart from 1950. If that worker limits herself to enjoying the same level of material comfort as her counterpart from five decades back, she can direct 50 percent of her income to saving. If she splits her Productivity Bonus into two piles, using half to support higher spending and half to support higher saving, she can save 25 percent of her income. These are large saving percentages, saving percentages only a small number of Americans achieve.

Let’s assume that it is possible for you to accumulate all of the assets needed to finance a middle-class retirement over the course of the 40-year work and earning stage of your life (age 25 to age 65) by saving 10 percent of your income. Let’s ignore a number of complications that need to be considered when putting together an actual retirement plan but not for purposes of making the point at issue here. More than doubling your savings rate would cut the amount of time needed to finance your retirement in half. Saving 20 percent rather than 10 percent, you should be able to do the job in 20 years rather than 40 years. That’s retirement at age 45!

Is it possible? It is. I have conversed with scores of people in the Financial Freedom Discussion-Board Community who retired in their late 30s or early 40s. They did not do it by saving 10 percent of their incomes. They saved more than that. It’s how much you save that really matters, not how much you earn.

One of the complicating factors I ignored in the discussion above is that compounding would not have had as much time to work its magic at age 45 as it would have had at age 65. Another is that most of us do not earn enough when we first enter the workforce to be able to save 20 percent. So early retirement is tougher to pull off than the scenario set forth above suggests.

The underlying point, though, is a valid one. Direct a big portion of your Productivity Bonus to saving, and you can aim to retire a whole bunch sooner than when you turn 65. And once you begin directing your money management strategy efforts to an early retirement rather than to the conventional kind, you will find yourself far more motivated to save than you ever were before. There’s a good chance you will end up saving a good bit more than 20 percent.

It’s entirely possible to earn a big income and yet make little progress with your money management strategy. It’s also possible to earn a moderate income and win financial freedom remarkably early in life.

Does intelligence matter when pursuing a money management strategy?

Not as much as you might think.

Managing Your Money

My experience is that those with an average level of intelligence have almost as much hope of winning financial freedom early in life as do the super-brains.

It takes some intelligence to save and invest effectively. First, you need to be smart enough to be able to earn some money to save and invest. Then you need to be smart enough to recognize the importance of holding onto enough of what you earn so that over time you can let your money begin working for you and you can become gradually less dependent on a paycheck to cover the costs of living. Putting together a savings plan and an investment plan takes a certain measure of intelligence too, of course. Intelligence is generally a plus, just as you would expect it to be.

But I have seen very smart people do an extremely poor job of managing their money, and I have seen people possessing an average amount of intelligence (me, for instance!) do a great job of it. It’s not intelligence that separates the sheep from the goats.

One problem with possessing too much intelligence is that it can lead to overconfidence. None of us is forced to become an effective saver in the way that we are forced to go to school or forced to get a job. For many of us, it’s an early experience of financial vulnerability that causes us to realize that we need to protect our future by saving.

Those with a good bit of confidence in their intelligence are less likely to experience those feelings of financial vulnerability. They feel that they can count on getting good jobs whenever they need them. It’s true that good jobs are generally available to the highly intelligent. But having a good job and a good income often does not translate into becoming financially free early in life. Unless you learn to pursue an effective money management strategy, you can earn a high income for many years and never make much progress on attaining your financial freedom goals.

Another factor is that those with a high level of intelligence often possess a strong ability to rationalize. That can be deadly to a quest for financial freedom. The moderately intelligent person who recognizes how thoughtless spending does harm to his hopes of realizing his money management strategy goals is better off than the high-IQ person who rationalizes self-destructive spending habits.

Those with lots of smarts can make investing more complicated than it needs to be. I get the sense that lots of moderately intelligent people are intimidated by the investing prowess that those who can throw big words around claim for themselves. Big words don’t pay the electric bill. The key to investing success is avoiding the self-destructive emotions of fear and greed. My experience in the Financial Freedom Community is that the best insights are offered by those who don’t make claims to knowing it all but who are just aiming to make sense of things for themselves (and who by doing so often provide a lot of help to a lot of others).

High intelligence is obviously a big plus in many areas of life. If you have it, consider yourself blessed. But if you don’t think of yourself as being a brain, please don’t see that as an obstacle to your hopes of winning financial freedom early in life. We have heard in our community stories of all sorts of people achieving financial freedom remarkably early in life, some of them very smart indeed and some only moderately so. If you are smart enough to see the importance of aiming for financial freedom early in life, you are probably smart enough to put together and implement an effective money management strategy.

Does age matter when pursuing a money management strategy?

Probably not too much.

Talking Over Money Problems

Do today’s young workers have as good a shot at winning financial freedom early in life as do those who came immediately before them?Or is the window of opportunity closing now that a good number of Baby Boomers have had the chance to fly through it?

My view is that today’s young workers face larger risks in their quests for financial freedom, but that they also enjoy greater opportunities. The key to doing well is not taking the conventional wisdom on money management strategy on faith. You need to question stale ideas on saving and investing and career growth. You need to become clear in your own mind as to what goals it is you are seeking to achieve with your work efforts and you need to craft a written plan for making progress on them.

Go with the flow, and there’s a good chance you are going to get washed down the rapids. Think strategically, and there are options available to you that were not open to middle-class workers of any earlier time. Get smart!

Set forth below are three arguments for why today’s young workers are doomed and three arguments for why today’s young workers are likely to end up doing just fine.

Doom Argument #1: Both stocks and real estate are overvalued. Even young workers with the discipline to save will not be able to earn the sorts of returns they need to win financial freedom early in life.

Doom Argument #2: Jobs are moving overseas, where workers are willing to work for less. Ordinary workers are no longer in a position to demand good salaries or good working conditions or good success paths.

Doom Argument #3: The Baby Boomers have the numbers advantage and the influence advantage. They will craft laws to benefit themselves.

How to Manage Money

Zoom Argument #1: Attitude is the most important thing. If you are positive and determined and creative, you will be able to move mountains.

Zoom Argument #2: Doom and Gloom stories are as old as the hills. Let them pull you down, and they become self-fulfilling prophecies. Ignore them now, and you will laugh at them after you make your way to the other side.

Zoom Argument #3: Life has continued to improve for most middle-class workers for a long time now, despite all sorts of bad stuff that has always caused some to despair for the next generation.

Does personality type matter when pursuing a money management strategy?

Yes, to some extent. But probably not as much as some believe.

Does budgeting matter when pursuing a money management strategy?

Yes. Planning is the key to making good things happen with your money management strategy.

If you were to take a survey of all the people who have won their financial freedom early in life, my guess is that you would find that the their distinguishing characteristic is that they budget. It’s not that they have great willpower and force themselves to budget. It’s that they think of budgeting differently than most others. Most successful savers enjoy keeping budgets.

Most unsuccessful savers think of a budget as a piece of paper with numbers on it that barks out commands at them. If that sounds like you, please try to get that idea out of your head. I don’t like the idea of having a piece of paper with numbers on it barking commands at me any more than you like the idea of having one bark commands at you. I probably wouldn’t even be able to keep to my budget if it were not for my wife’s gentle (!) suggestions that I make an effort to do so.

The power of a budget is in how it enhances your understanding of where your money is going. Those who don’t keep budgets think they possess a rough idea of what they spend money on. Test them, and you almost always find that their impressions are far from the mark. Budgets are not command tools. They are teaching tools. They tell you what you need to know to make your life a success.

It doesn’t seem like it should make such a big difference to the success of a money management strategy to write things down on paper. It does, though. There is something that happens in the act of writing things on paper that causes you to remember them. The act of writing on paper takes a vague notion that is drifting through your consciousness and gives it concrete and permanent substance. Budgets don’t force you to do anything you don’t want to do. They guide you to where you want to go.

Money Management Plan

I believe in budgets. Most of those who keep budgets manage their money at least reasonably well. Most of those who do not do not. Budgets matter more than intelligence. Budgets matter more than income. Begin keeping a budget and you’ll be greatly increasing your odds of enjoying a successful money management strategy.

Does luck matter when pursuing a money management strategy?

Yes. You need to be lucky enough to have the sorts of life experiences that help you discover the importance of planning to an effective money management strategy.

Few early retirees attribute their success to luck. A poll taken at the Early Retirement Forum shows that only 16 percent of us say that it is luck or an inheritance that permitted us to do what so few manage to do. We prefer to credit our love of planning and our frugal lifestyle for our successful money management strategy.

Planning is the key, in my view. Still, I like the comments of the community member who asked whether luck played a role in our transformation into good planners. That’s what newcomers to our movement need to hear about.

Success follows from planning. The inclination to plan is generally not something that is willed. Some have it and others do not because some enjoyed life circumstances that caused them to learn of the benefits of planning while others did not.

Luck really is an important factor in the success of a money management strategy, in other words.

I was lucky that I lost my dream job at age 35. Losing that job pissed me off. Getting pissed off provided me with the motivation to seek out new ways to advance in my career.

I decided that the thing to do was not to try to find better jobs and work harder. I learned from that experience that, no matter how good a job I found and no matter how hard I worked at it, it could be taken from me because of developments beyond my control. To gain the power to steer my future course, I needed money in the bank. The path to being able to spend the hours of my days doing the work I loved was overcoming dependence on a paycheck to cover my costs of staying alive.

Strategies for Managing Money

The luckiest day of my life was the day I lost the job I loved with all my heart. That’s a hard sort of luck. It was an okay way for me to learn the importance of financial planning because it happened to me at age 35. If it happens to you at age 45 or at age 55, you might not ever come to feel about it the way that I came to feel about it after the passage of some time.

We need ways to teach people the lessons without them having go through the life experiences that caused us to learn them.The conventional money management strategy advice doesn’t do it. We’ve all heard 180 times how we should put aside 10 percent for a rainy day and pay ourselves first and all that other jizz-jazz. The people who say that stuff are well-intentioned. But the words do not hit the mark. Those sorts of sermons do not cause too many to get religion.

Our task is to figure out what does work. What sorts of arguments hit people where they live? What sorts of stories make people stop for a moment and really think through what it is they are doing when they elect not to save? What words prompt constructive actions? What calculations help people see quickly that they possess a power to win financial freedom many years sooner than they now realize is possible?

Financial freedom comes to those who get smart about money. The first step to getting smart is experiencing that flip-of-the-light-switch moment where the true nature of the financial freedom quest–that the idea is not to engage in a boring exercise in being responsible but in a liberating exercise in gaining the power to call the shots about your own future–becomes clear.

Those of us who experienced that flash of insight early in life really have been in an important sense luckier than most other middle-class workers. Our task now is to figure out how to spread the luck far and wide.

A New-Approach Money Management Glossary

Set forth below is the text of the Glossary for the book Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work.

Stock Market Terms

A Goal of Intense Personal Concern: A saving goal of particular importance to a particular saver, which thus possesses motivational power strong enough to energize a successful saving effort

Bottom-Up Budgeting: An approach to budgeting in which the amounts allocated to the various spending categories are determined through comparison of the value propositions offered by spending and saving rather than through the use of pre-fab percentage-of-income targets such as the popular rule-of-thumb suggesting that 10 percent of income be directed to saving and the remainder allocated to the various spending categories

Compounding in Reverse: The phenomenon in which a worker relying on compounding of returns to supply much of the money she needs to retire is forced by unexpected circumstances to withdrawal a portion of her savings to cover living expenses and suffers the loss not only of the nominal amount withdrawn but of the much larger amount representing the long-term compounded value of the amount withdrawn

Compounding Returns: The phenomenon by which a worker making smart money choices obtains long-term benefits from either saving or spending far in excess of the benefits obtained immediately following the money choice

Deferred Gratification Fallacy: The mistaken notion that all of the benefits of spending are realized immediately on completion of a purchase and that all of the benefits of saving are delayed until far into the future

Fear of Saving: The inner resistance to saving that many feel because they associate saving with miserliness and other Scrooge-like behavior

Financial Independence (or Financial Freedom): A power that ones comes to possess in greater amounts over the course of a lifetime as one becomes gradually more able to call the hours of the day one’s own

Freedom Dollars: Earnings directed to saving and, thus, to the acquisition of a freer life

Fun Income Units: The compensation obtained from work in the form of enjoyment of the work being performed

Job Diversification: A term used to convey the importance of practicing Three-Paycheck Analysis so as not to become complacent about holding a job that provides a good amount of Monetary Income Units but not enough in the way of Fun Income Units and Opportunity Income Units

Life Project: The set of goals that a person most wants to achieve during his or her lifetime

Luxury Saving: Another term for “Passion Saving”

Luxury Spending: Spending for things you desire but do not need to sustain life

Money words

Middle-Class Millionaire: A worker who does not earn an income large enough for him to be classified as “rich” but who is nonetheless able to enjoy The Self-Directed Life because he saves a large portion of his Productivity Bonus

Monetary Income Units: The compensation obtained from work in the form of a salary or an hourly wage and benefits

Money Allocation Moment: The 30 seconds or so during which a person faced with an enticement to spend decides whether spending or saving the money at stake offers a stronger value proposition

Mr. Budget: The name given to the third partner in the marriage relationship enjoyed by two Passion Savers; since Passion Saving is a form of life planning, Mr. Budget helps to bring spouses together in pursuit of their mutual goals rather than generating the friction often experienced by Sacrifice Savers trying to follow a budget

Multiply-by-25 Rule: An analytical tool that calls for the annual expense of a particular spending choice to be multiplied by 25 to determine the accumulated capital needed to finance that spending habit for life (presuming that amounts saved generate an annual real return of 4 percent)

New Luxuries: Rare comforts of modern-day middle-class life that cannot be obtained by spending, but only by saving

Opportunity Dollars: Money that is not needed to cover the basic costs of living (Survival Spending) and which thus can be directed to advancing one’s Life Project through either Luxury Spending or Luxury Saving

Opportunity Income Units: The compensation obtained from work in the form of enhanced opportunities to obtain appealing future employment because of skills developed or contacts formed

Passion Economy: A term used to refer to the economy we live in today, one in which workers who do work for which they feel a special attraction are able to earn great rewards while workers who do satisfactory but uninspired work often are at far greater risk of diminished life satisfaction in the future than were their counterparts from earlier times

Passion Saving: Saving used to enhance the enjoyment of life in ways as exciting as the ways in which Luxury Spending (or Passion Spending) enhances the enjoyment of life

Passion Spending: Another term for “Luxury Spending”

Paycheck Dependence: Reliance on the income earned from work to pay the costs of sustaining life

Personal Benchmarking: A tool for effective money management in which individuals become more aware of how much money they direct to various activities and thereby become better able to identify where changes in spending habits could be made for the purpose of achieving saving goals sooner

Money Management Gloassary

Practical Dreamers: Middle-class workers who hold visions of doing work they love but worry that, if they follow the “Do the Work You Love and the Money Will Follow” maxim, the “Money Will Follow” part of the vision will not take place soon enough to allow the worker to take care of his or her financial responsibilities

Productivity Bonus: The extra buying power possessed by workers today as a result of productivity increases of the 20th Century

Retire Different!: A Passion Saving slogan that expresses the need for a saver to pursue a saving goal possessing a unique motivational power for her and her alone

Retire Today!: A Passion Saving slogan that expresses the idea that Passion Savers are able every day to enjoy a small bit of the liberating feeling that comes to the Sacrifice Saver only on the night of his or her 65th birthday

Retiring in Stages: A conception of retirement in which Paycheck Dependence is seen to be overcome not all in a flash on the night of the saver’s 65th birthday but in bits and pieces over the course of the saver’s working life

Sacrifice Saving: Saving to provide for the most basic and universal (and, thus, boring) saving need, the need to finance an old-age retirement

Salary Trap: A phenomenon in which workers become more dependent on their paychecks as their income increases because they direct at least 90 percent of their pay increases to spending and over time become accustomed to the ever more expensive lifestyles they are able to purchase for themselves with their ever-larger salaries

Saving for Today: An approach to saving in which the saver’s focus is on how attaining higher levels of financial freedom can be used to enhance his enjoyment of life today and in the near-term future

Sleep-Easy Money: The amount of saving needed to permit a worker to overcome dependence on a paycheck to cover the costs of sustaining life

Spendthrift Misers: Workers who deny themselves the New Luxuries because they are too “cheap” to save effectively

Survival Spending: Spending used to cover the costs of sustaining life, such as spending on food, shelter, clothing, and health insurance

Career Change Terms

Talking Numbers: A term used to capture the idea that, to a Passion Saver, budget numbers are never just numbers, but numbers that tell stories of life transformation

The Budget That Learned to Say “Yes!:” In contrast to the Sacrifice Saving budget, which is perceived as placing restrictions on what one can do with one’s money, the Passion Saving budget opens up exciting new ways to realize one’s most important life goals and is therefore perceived as a document that says “Yes!” to the budget crafter’s desires rather than one that only says “No!”

The Freedom Store: The pretend retail establishment to which one goes when one wants to use one’s money to acquire not more of the goods and services obtained by spending but more of the freedom and opportunity obtained by saving

The Little Black Book of Saving Secrets: Insights collected by a Passion Saver as he comes to appreciate how money management is really life management and begins paying greater attention to how others have managed the sorts of work transitions that he is likely to be coping with in his own life at some later time

The Money Bridge: The amount of savings needed to finance the transition from a job that pays well enough but does not much excite the worker to one which excites the worker but which may not pay well enough in the years immediately following the transition to cover by itself the worker’s living expenses

The Self-Directed Life: The life enjoyed by the worker who has built savings-generated income streams large enough to permit her to call the shots regarding the work she does

The Turned-On Budget: A budget in which life, work, and money goals are integrated and which is thus viewed not as a boring list of numbers but as a document showing progress on the realization of one’s dreams

Passion Saving Glossary

Three-Paycheck Analysis: An approach to comparing employment options in which not only Monetary Income Units are considered, but also Fun Income Units and Opportunity Income Units

Upsizing: A phenomenon whereby a worker employs effective saving practices to expand the scope of employment opportunities open to him

Well-Compensated Wage Slaves: Workers who possess buying power greater than that which was possessed by most workers of the past but who nonetheless remain highly dependent on a paycheck to cover their costs of living

You, Inc. (or Me, Inc.): A term used to convey the need for workers in today’s economy to view themselves as businesses that need to be built into stronger and more profitable entities over time