Money and Marriage — Persuading Your Spouse to Save

She loves you.
Now you know that can’t be bad.

–The Beatles, “She Loves You”

Marriage and Money: Suggestion #1 for Persuading Your Spouse to Save — Keep Your Expectations in Check.

Understand that your spouse has a different personality than you and takes in information in different ways. Don’t expect what works for you to work for your spouse.

It will probably take some for you to figure out what works for your spouse. Try to exercise patience.

Money And Marriage

Managing your money well is in many ways akin to managing your diet well. All of us who have tried to lose weight have had moments when we wished that results could be obtained more quickly. When I have one of those moments, I remind myself that weight isn’t usually put on quickly either, and that that reality will help lock things in after the weight is taken off. It’s like that with saving. Learning to save effectively takes time, but provides benefits for a long time to come. Approaches that generate quick results are suspect.

Marriage and Money: Suggestion #2 for Persuading Your Spouse to Save — Keep Money Issues in Perspective.

Saving is important. I wouldn’t have devoted so many years of my life to studying it if I didn’t think it were a topic of great importance. I learn all the time of still more reasons for seeing saving as important.

It’s not the only important thing, however. Don’t let your desire to help your spouse learn how to save more effectively cause a rift in your marriage. Do not do this. Do not do this. Do not do this.

You are asking your spouse to change. That’s difficult. Always keep in mind that you are asking something hard of your spouse.

Don’t quit, though. Pushing too hard is a mistake. Pushing too soft is a mistake too. When you find yourself pushing too hard, remind yourself what the marriage means to you. When you find yourself pushing too soft, remind yourself what the marriage means to you.


You will hurt the relationship if this matters and you drop it because you encounter some resistance. You have a need to have a spouse that manages his or her money more effectively. And your spouse has a need to have a spouse that pushed him or her to manage his or her money more effectively. Helping your spouse is part of the deal. Giving up isn’t helping.

Apply only so much pressure, but do apply some pressure. I mentioned that this improvement project is hard on your spouse. It’s hard on you too. The hard part for you is knowing just how much to push.

You need to rely on all of your knowledge of what makes your spouse tick to figure that one out. There is no such thing as a pure money topic. Successful money steps are money steps taken with an appreciation of how the money issues in question relate to other aspects of your quest to make something meaningful out of your life.

Money questions matter. Non-money questions matter too.

Marriage and Money: Suggestion #3 for Persuading Your Spouse to Save — Watch for the Miscommunication That Goes With Being in Love.

Persuading Your Spouse to Save

Everyone wants to manage his or her money effectively. I mean, come on.

The reason why you are hearing resistance to your ideas is that your spouse hears the words you say as signifying something other than what they signify for you.

You say: “I want to know that we will have enough money to be able to retire.” Your spouse hears: “I want you to give up on some of your crazy dreams and start being more responsible and boring.”

You say: “Do you really need to pay $3 for coffee everyday?” Your spouse hears: “I don’t think of you as being so special that you deserve extravagant treats just for showing up at work.”

You say: “I’m worried that we have so little to fall back on if you lost your job.” Your spouse hears: “I don’t have confidence in you.”

Does the fact that your spouse hears things in such scrambled-up ways mean that he or she is a doofus? Oh, no. It means that this guy (or gal) is in love with you!

A guy (or gal) who is in love with you can’t stand to think that he (or she) is letting you down in any way. It’s often not possible to talk with a spouse with as much ease as you can talk to a friend because your spouse is so much more than a friend. The more caring that is there, the more delicate is the communication issue.

Marriage and Money: Suggestion #4 for Persuading Your Spouse to Save — Let Your Spouse Do it His or Her Way.

Some people cannot tolerate the idea of being given a set amount of spending money for the month. Some people are just fine with the idea. Don’t assume that because you cannot stand it your spouse cannot stand it either. If that is what works for him (or her), use that.

Some people save by cutting out luxuries. Some people really enjoy luxuries and cannot bear the idea of giving them up. Perhaps your spouse can listen to pleas to spend less on luxuries, but not to pleas to give them up altogether. Perhaps you could frame your saving arguments in such a way as to persuade your spouse that saving effectively allows you both to enjoy more luxuries over the course of your lives.

Learn How to Fight Fair

You’re trying to change your spouse and that’s always a delicate business. Make the changes being suggested as palatable as possible by designing them in ways that makes sense to your spouse.

Marriage and Money: Suggestion #5 for Persuading Your Spouse to Save — Make It Romantic.

The saving quest is a romantic quest.

There was something I read about divorce once that made an impression on me. The author of the book I was reading noted that couples that divorce can never look at their photo albums in the same way again. All of the pictures have that person in them, or some friend or relative of that person, or were taken in a place you went to with that person.

The photo album problem is hardly the biggest problem that comes with divorce. There’s a sense in which it is a very big deal, though. We look at photo albums to review our progress through life. We feel weepy when we look at our high school yearbooks because we think back to the challenges we faced back then with the knowledge that we have overcome some of them that we thought we would not be able to overcome and we have failed to overcome some others that we thought we would be able to overcome. Our lives are a story. Every day we write the book on our romantic quest to make our lives mean something.

The point of saving is to become able to do more exciting things with your life. So many money advisors miss this. It’s a point of critical importance. It’s the reason why saving, properly understood, is not at all a boring business. It’s exciting stuff.

Your spouse is your partner in your romantic quest and you are her (or his) partner in her (or his) romantic quest. Use this.

Budgets are sexy. True fact. Spend three hours going through each item in your budget and talking over how that money could be put to different uses so that both of you can make more of your lives and you are going to close the budget binder turned on about the idea of spending some quiet time with your spouse.

Please do try this at home. Budget sex is great sex.

Marriage and Money — Suggestion #6 for Persuading Your Spouse to Save — Celebrate the Victories.

Each step forward creates momentum. Saving effectively gets easier and easier and easier over time. It’s like running. It’s boring the first time because you are out of shape. It’s fun after you get good at it.

Don’t get greedy when your spouse makes progress. You don’t want to be a nag pushing for more. Remember the importance of patience. Let your spouse enjoy the satisfaction that comes with having made some progress. Have confidence that the wheels will begin to turn on their own power if you give them a chance.

You Love This Crazy Person You Married, Right?

At some point, your spouse will be asking questions about ways to save even more effectively. That will happen when he or she begins to think of the saving idea as his (or her) idea. If you nag, this never happens. If it happens, the wagon starts picking up speed quickly.

Marriage and Money — Suggestion #7 for Persuading Your Spouse to Save — Don’t Let It Become a Chore

The single biggest reason why many people are not able to save effectively is that saving has come to be viewed in such negative terms. Saving is for tightwads. Saving is for misers. Saving is for losers. Saving is for the timid.

Don’t sell it that way.

Saving is spending less on some things so that you can spend more on other things. Saving is spending less at some times so that you can spend more at other times. Saving, properly understood, is always about making better choices and obtaining greater value from a limited pool of earnings. Saving is buying freedom, and freedom is cool.

If your spouse has doubts about this, use some of the savings to finance a splurge. Make saving enjoyable. Think about diets again. You lose more weight on a diet that never again permits you to eat ice cream. Except for one thing. You don’t stick with a diet that never again permits you to eat ice cream.

You want your spouse to sign on to a spending plan that will last for a long time. There’s got to be some pleasure in it for that to happen.

Marriage and Money — Suggestion #8 for Persuading Your Spouse to Save — Do Your Part Regardless of What Your Spouse Does.

She Loves You (and You Know That Can't Be Bad)

If you are denying yourself some things you would like to spend money on because you see the importance of saving and your spouse is not doing the same, you are going to feel temptations to give up the cause because it is not working out in a way that is “fair.” That’s mixed-up thinking.

First of all, you might persuade your spouse over time if you continue the fight on your own. If the spouse who believes in saving gives up, the battle is lost for good.

Second, you will not feel good about yourself if you go along with a spending program that you do not believe in just because it is the only way to get on the same track as your spouse. You want to lift your spouse up, you do not want to permit your spouse to pull you down.

Things change. The trick is being properly positioned when the change comes. Someday, someway, sometime, your spouse will show interest in saving. You want to be as well-developed in your saving habits as you can possibly be when that day comes.

Don’t you end up being the spouse that caused the partnership’s saving dream to fail.

With a love like that
You know you should be glad.
Yeah, yeah, yeah!
Yeah, yeah, yeah!
Yeah, yeah, yeah, yeah!

Pinching Pennies Is Not So Hot An Idea

The first reason why pinching pennies is not so hot an idea is that it puts the focus in the wrong place.

Pinching Pennies Most people who pinch pennies do so because they want to save more. Will doing so help you save? Perhaps. Some. In the short term.

In the long term, though, this approach puts the focus in the wrong place. Pinching pennies is a negative act. It is the act of avoiding spending.

What works are money management efforts motivated by a positive purpose. Your focus should be not what you want to cut out of your life, but what you want to add to it. The trick is not to crush your drive to spend, but to develop an equally strong desire to save.

Both frugality approaches aim to increase the amount in your bank account. The difference is that money management efforts backed by positive motivations usually can be sustained while those backed by negative motivations often cannot be sustained.

The second reason why pinching pennies is not so hot an idea is that it is a small-minded approach.

There’s a reason why we use ugly words like “miser” and “cheapscate” and “tightwad” to describe those who devote too much effort to pinching pennies. Pinching pennies truly is a small-minded thing to do.

Please be careful in how you hear the message I am putting forward here. I am not saying that saving money is small-minded. Saving money is how you win your financial freedom. Saving money is how you liberate yourself to do things more exciting and important than what you do today to earn a living.

Seeking financial freedom gets you thinking about all sorts of great things that you can do with your life that you are not able to do with it today. Saving expands you.


But the phrase “pinching pennies” suggests that you are carrying out the money management project with a ruthlessness that results in a feeling of pain. You thereby transform the life-enhancing frugality concept into something negativre. Pinching pennies gets you thinking about things you truly enjoy that you can cut out of your life. Pinching pennies narrows you.

The third reason why pinching pennies is not so hot an idea is that it causes you to bypass the most critical part of the money management process.

What’s the purpose of money management? It is not to spend less. It is to get more value out of the money you earn. It is true that there are many circumstances in which managing your money better will mean spending less. There are also many circumstances in which managing your money better will mean spending more.

Spending is not by its nature bad. Spending provides you with lots of life enhancements. To pinch pennies is to cut back on spending without thinking through whether the particular spending proposition at issue delivers a compelling life enhancement or not.

The key to effective money management is the assessment of the value propositions associated with spending and saving. The phrase “pinching pennies” suggests an aversion to spending regardless of the value proposition it offers in a particular circumstance. If your quest to pinch pennies causes you to fail to assess the value proposition offered by an enticement to spend, it can hurt you more than it helps you.

The fourth reason why pinching pennies is not so hot an idea is that pinching pennies ignores the long-term value offered by many decisions to spend.

You are thinking of trading in your old car for a new model. You elect not to because you are determined to pinch pennies. A good thing? What if your old car breaks down and you find yourself faced with big repair bills or even put yourself at risk of injury?

You are thinking of buying a health club membership. You elect not to because you are determined to pinch pennies. A good thing? What if you develop heart disease because your weight gets out of control?

Pinching pennies is a mindless approach to money management. Pinching pennies gives frugality a bad name.

The fifth reason why pinching pennies is not so hot an idea is that it serves as an unfortunate alternative to watching pennies.

Reduce Spending Watching pennies is a wonderful idea. Most of us are able to save far larger sums than we think are possible. It’s usually not the rare large expenses that do us in. It’s the cumulative effect of the many small things we spend on mindlessly (mindless spending is just as bad or even worse than mindless saving, of course). You can open up lots of opportunities for enhancing your life by watching pennies.

What’s the difference between watching pennies and pinching pennies? The difference is the attitude applied to the task. The penny watcher compares value propositions and saves in cases in which saving looks best while continuing to spend in cases in which spending looks best. The penny pincher just tries to stop, stop, stop spending, no matter what.

The sixth reason why penny pinching is not so hot an idea is that it usually doesn’t produce much in the way of results.

I don’t mean to make fun of penny pinchers. I understand why many middle-class workers feel driven to engage in penny pinching. Most of us spend too much and realize that we are wasting a good bit of our earnings by doing so. We need to do something about it.

My goal is not to find fault with the drive you feel to begin penny pinching. It is to channel that drive into what I believe is a more rewarding direction. Don’t pinch your pennies. Watch your pennies.

It might seem like an insignificant difference in semantics. I think it’s an important distinction.

I’ve seen many middle-class workers transformed into effective savers by identifying a motivation for saving that helped them see the money management project in a more positive light.

The bottom line is that penny watching works. Penny pinching does not. That’s the most important reason why penny pinching is not so hot an idea.

How to Start Saving Money

The most frequent question I am asked when giving money management advice is “How do I get started saving money?” I’ve learned that the best way to get aspiring savers started is with the wonderfully simply but wonderfully powerful Multiply-by-25 Rule. There is something magical about how this rule helps people quickly learn how to start saving money.

mow to start saving money The power of the Multiply-by-25 Rule is how it gets to the nitty-gritty of what is going on in the money management project. Why is it you want to save? It’s so that your money can start earning money, and thereby a bit of the burden of doing that by going to an office or factory each day can be taken off your shoulders.

Diminishing Your Reliance On a Paycheck

Since the goal of saving is to have your money earn money, it makes sense to measure your progress as a saver by determining the extent to which your saving efforts are diminishing your reliance on a paycheck to cover the costs of keeping body and soul joined together. The usual way of doing this–assessing how much you need to finance a complete retirement from the world of work–is a depressing and frustrating exercise.

What good does it do you to learn that when you have saved $1 million or $2 million, you will no longer need to work? Telling someone struggling to save her first dollar that she needs to save $1 million or $2 million is like telling her that she needs to learn how to fly to the moon. The goal is so big that it paralyzes rather than encourages. That’s not how to start saving money.

The Passion Saving way to save is to break the saving project into manageable bits, focus on a saving goal that provide the necessary motivation to tackle the first bit, and thereby gain confidence that one really can save and excitement over the benefits that can be earned with effective saving. Forget about determining how much you need to save to finance all your costs of living and enjoy a full retirement from the work force. Figure out instead what you need to put away to build up a savings fund large enough to finance just a single spending category. That’s how to start saving money!

Say that you spend $40 per year on magazine subscriptions. The Multiply-by-25 Rule tells you that it takes a savings fund of $1,000 to finance that spending category for life. $1,000 kicks off enough earnings each year so that you never again need worry about working to pay for magazine subscriptions. That’s on an inflation-adjusted basis. That is, the magazines are paid for and the real value of the $1,000 does not diminish at all over time.

how to multiply money

The Multiply-by-25 Rule assumes that you will be able to invest the money saved in an investment that will provide a 4 percent annual real return. If you prefer to go with an assumption that your investments will only earn a 3 percent annual real return, you need to employ instead a Multiply-by-33 Rule. If you think that it is reasonable to assume a 5 percent annual real return, you can use a Multiply-by-20 Rule.

Where the Battle Is Won

Do you see how powerfully motivational this tool can be in showing you how to start saving? It’s easy to multiply by 25. So you can apply the rule each time you ponder a decision to spend money or not. The battle for financial freedom is won not at your kitchen tablewhen you list a series of spending categories and spending allocations into a budget binder, but on the street, when you make decisions whether to buy things or not. The beauty of the Mutliply-by-25 Rule is that it is easy to remember and requires only a simple calculation. You can apply it anytime a thought to spend enters your mind and you want to test your newly found power to save when saving makes sense.

There are only two steps to application of the Multiply-by-25 Rule. One, you need to determine how much an item of spending costs over the course of a year. And, two, you need to multiply by 25 to learn how much money you need to save to create a fund that covers that expense for life.

How much of a fund does it take to cover your Saturday-night movie habit? If it costs you $20 per week to buy tickets and a soda and popcorn for you and a friend, that translates into an annual expense of $1,040. Let’s call it $1,000 for purposes of easy calculation. Multiply by 25, and you know that you need to save $25,000 to cover your movie going expense for life.

how to save

Using the Multiply-by-25 Rule regularly gets you thinking about money management in a new way, a way that reveals to you how to start saving the way the world’s most effective savers save. One great thing it does is highlight the key insight that financial freedom is not an all-or-nothing proposition. If you have ever tried to lose 30 pounds in one month, you probably can see why this insight is so important. Life-enhancement goals are achieved by approaching them one step at a time. The Multiply-by-25 Rule shows you how to start saving one step at a time.

A Feeling of Accomplishment

Another benefit of this approach to saving is the encouragement it provides when you achieve the goal of building a fund large enough to finance a single spending category for life. It doesn’t take all that long to save the $1,000 you need to finance your magazine spending for life. But it provides a real feeling of accomplishment to know that you need never again be concerned about going to work to earn money to cover that item of spending.

The Multiply-by-25 Rule helps you learn how to start saving in another way. It helps you see the connection between spending more and being required to work more. Many of us spend as a way of alleviating the frustration we feel from having to do work we don’t really love. That’s a “solution” that makes the problem worse!

The Multiply-by-25 Rule makes the connection between over-consumption and continued paycheck dependencepainfully clear. It’s not too long after you get down to the business of trying to create a $25,000 fund to cover your movie-going expenses that you start wondering whether it might make more sense to go to the movies not once every week but once every two weeks.

The Multiply-by-25 Rule also helps you to learn how to start saving by drawing your attention to the true purpose of saving — winning the financial freedom to live the life you want to live. Most saving advice is aimed at helping you learn to save to finance an old-age retirement. Saving for financial freedom you begin to enjoy earlier in life is far more effective because we all feel more motivated to do things that produce near-term gains. Saving just $1,000 permits you to feel the sweet feeling of financial freedom in a small way. You really need to save only that amount to be free of the need ever again to work to pay for magazines.

Younger Is Better

Yet another way in which the Multiply-by-25 Rule helps you learn how to start saving is by underlining the importance of beginning to save when you are young. It won’t be too long after you begin making use of the rule that it will hit you that you are eventually going to need to build up funds to cover all of your spending categories at some point in life and that it makes sense to get the task out of the way as early in life as possible.

learn to save money



If you have your magazine category savings in place by age 30, that’s when you stop paying for magazines with the work you do. Wait until age 40, and your labor foots the bill for an additional 10 years. Hey! Doesn’t it sound like a good idea to avoid having to pay for magazines for 10 years just by winning your financial freedom for that spending category a bit sooner? That’s how those rare people who somehow knew by themselves how to start saving do things. Now you can too.





SunriseThe Multiply-by-25 Rule is a simple rule. But it is the most powerful money management tool that I have discovered in 14 years of studying what it takes to win financial freedom early in life. The best practical advice that I can offer those seeking to learn how to start saving is to start making use of the Multiply-by-25 Rule on a daily basis when faced with decisions as to whether to spend or save money.






How Much to Save — Anything But 10 Percent!

Consideration #1 in Deciding How Much to Save — The Less You Save, the Longer It Takes.

At some point in your life you need to have enough saved not to need to work anymore. It’s obviously better to get there sooner rather than later. Saving more gets you there sooner.

How Much to Save

This is a painfully obvious point. I mention it, though, because my sense is that many people never think through the implications of their decision to take the slower route to financial freedom. Some say “I don’t like to save.” Fine. But you are not avoiding the reality of needing to save enough to provide you financial independence by taking the slow route. Those who save little need to save just as much as those saving much. It just takes them longer to get to the end point of the journey.

Those who say they don’t like saving spend a greater part of their lives saving than do those who say they do like saving. Make sense? No, this does not entirely make sense.

If you really do not like saving, you should save a lot and put the job behind you as early in life as possible. If you begin working at age 20 and win financial freedom at age 45, you spend 25 years saving. If you begin working at age 20 and win financial freedom at age 70, you spend 50 years saving.

Consideration #2 in Deciding How Much to Save — Telescoping the Process Reduces the Amount of Saving That You Must Do.

Only a portion of the money that finances your financial freedom will come from money you earn at your job. A good bit will come from earnings on your savings — that is, your investment returns.

It’s preferable to have your money do as much of the work as possible and for you to do as little of it as possible. By increasing your saving percentage, you place more of the burden on your money and relieve yourself of much of the effort of financing your financial freedom plan.

Those who save 30 percent of their incomes not only complete the saving project far sooner than do those who save 10 percent. They shift much of the burden of financing their financial freedom to the money they save. Saving generates saving. Save more and you end up needing to save less.

Consideration #3 in Deciding How Much to Save — Saving More Opens Up Opportunities to Earn More.

The New Economy is an Opportunity Economy. The middle-class worker has never been at as much risk of falling out of the middle-class. The other side of the story is that the middle-class worker has never possessed so many opportunities to rise out of the struggling middle-class into the ranks of the truly wealthy.

The Save 10 Percent Rule

It’s those with money in the bank who are best positioned to make the jump. You will probably at some point in your life have a chance to be part of a start-up enterprise that could make you a millionaire. You will probably at some point in your life have a chance to make a career shift that would require a short-term pay cut in exchange for a long-term chance of a big pay increase. If you don’t have money in the bank, you won’t be able to take advantage of those sorts of opportunities. If you do, you will.

Consideration #4 in Deciding How Much to Save — 10 Percent Is the Most Boring Saving Percentage.

The conventional advice is to aim to save 10 percent. Why 10 percent? It’s a number that people came up with when they tried to determine how much you would need to save to be able to retire at age 65. Saving 10 percent just barely gets you to where you need to be at the stage of your life when you are running out of energy to continue at your job at the same level of intensity.

What you are really doing when you save 10 percent is financing a fund that will be used to cover your costs of living when the machinery of You, Inc., (your body) is no longer able to do the job. Even when that sort of saving plan works, it does not provide much in the way of the exciting kind of financial freedom. It frees you of the need to work in your old age, and that’s of course a good thing. But your life options are limited at age 65. The more expansive form of financial freedom goes to those who use saving to enhance their life options at earlier ages.

The end-result of saving 10 percent is none too exciting. Most of us don’t even want to think too much about the day when we turn old and gray, much less give up benefits of spending to provide financing for it. The lack of excitement we feel about the conventional saving goal is a big part of the explanation of why the national savings rate is so low.

Saving 20 percent is more exciting. Half of your saving effort is directed to the boring saving goal when you save 20 percent and the other half is directed to opening up opportunities to do some very exciting things with your life. At 30 percent, saving becomes even more of a thrill.

It is not three times as hard to save 30 percent as it is to save 10 percent. In some cases, it’s easier. Saving 30 percent can be more fun than saving 10 percent because the Life Goals that can be attained by saving 30 percent generate so much more in the way of motivation.

Consideration #5 in Deciding How Much to Save — The Value Proposition for Spending is Sometimes Too Compelling to Justify Much Saving.

What Percentage of Income Should You Save?

Conventional money advisers harp on the benefit of compounding returns earned by those who save young. There really is a bit of magic associated with the compounding returns phenomenon. Considered in isolation, the idea of saving young makes all the sense in the world.

Your decision as to how much to save should never be made in isolation, however. Effective money management is an exercise in making comparisons between the value propositions offered by spending and the value propositions offered by saving. It’s not just saving that provides compounding returns to the young. Spending does too.

A trip to Europe provides more lifelong educational benefits to a 30-year-old than it does to a 60-year-old. Buying exercise equipment provides more lifetime benefits to a 30-year-old than to a 60-year-old. Buying a personal computer provides more lifetime benefits to a 30-year-old than to a 60-year-old.

Saving is often a great money choice. Spending is often a great money choice. Don’t get so caught up in your enthusiasm for saving large percentages of your income that you take a pass on wonderful value propositions being offered to you by spending.

Consideration #6 in Deciding How Much to Save — Rebels Save.

One day I was waiting for a meeting to begin at my corporate job and they started playing “Taking Care of Business” to set the mood. The Establishment Machine co-opted rock and roll. It doesn’t make you too much of a rebel anymore to like songs with a strong backbeat.

Reminders to Save
What does make you a rebel? Gaining control over your future. Future rebellions will come from those who have walked the path to plentiful free time and soul-satisfying work.

It’s not really butterflies that are free. It’s effective savers.

Personal Finance Planning Is Not About Self-Denial Anymore

Personal finance planning is a boring business. That’s what most people think anyway. But it needn’t be so. Make your money management project an adventure in pursuit of The Good Life, and you will never view saving as a boring money allocation option again.

A New Approach to Personal Finance Planning

The problem is that most people associate personal finance planning with sacrifice. My experience is that there is little connection between the two. In my case, each increase in saving led to greater enjoyment of life, not only in the long-term, but in the short-term as well. So I’ve tried to understand better the widespread perception that to manage your money well means to enjoy life less.

I’ve come up with a theory. Just as generals have a tendency to develop battle plans based on what worked in previous wars, consumers have a tendency to form viewpoints about personal finance planning based on the experiences of earlier generations.

It’s not that long ago that the pleasures derived from material goods were hard to come by. Television is a recent invention, as are the airplanes that make exotic vacations feasible for the middle-class. It’s only the large productivity gains enjoyed in recent decades that have allowed many of us to even consider the possibility of eating out several times a week.

So we define luxury as the possession of goods and services–electronics equipment, restaurant dining, vacations. But are these things really luxuries in today’s world? A luxury to me is something rare and precious that brings an unusual feeling of comfort or pleasure. I question whether the things that can be bought with a credit card still fit the bill.

Is Television Still a Luxury?

Television was a luxury when television first became available. But today a small-screen color television with the ability to play videos in your home can be purchased for $200. It’s not hard enough to come by to be considered a luxury.

Manufacturers have tried to restore television to luxury status by increasing the size of the screen. I don’t think this works, however. A big-screen experience is better than a small-screen experience. But the difference is not great enough to justify calling the large-screen television a luxury. The jump from no television to a small-screen was far more significant than the jump from small-screen to big-screen.

I don’t think you can buy luxury with spending anymore. Consumer goods have become too plentiful and too cheap to make ownership of them all that special. There have been efforts to add expensive attributes that increase the feeling of specialness for those who own them. But does a hamburger cooked on a $5,000 grill taste that much better? If not, I question whether the increased price delivers genuine luxury.

Money Solutions

What are the true luxuries today, then? It’s those things that are possessed only by a few, those things that offer an unusual degree of happiness and contentment. I can think of several things that fit the bill, but they aren’t things you can attain by spending more. They are things you can only possess by saving more.

Freedom from Anxiety over Job Loss

Freedom from anxiety over job loss is a luxury in today’s world. Job security wasn’t such a big deal in earlier times, when there were millions of middle-class workers who believed that it was unlikely that they would ever lose their jobs. Today, the smartest and hardest-working employee has no such confidence. Job security is rare.

That makes it a luxury–one that can be purchased only by saving enough to become financially independent of a paycheck. Attaining a higher level of job security is the sort of goal at which your personal finance planning efforts should be aimed.

The ability to retrain for new types of employment is another of the new luxuries. The New Economy offers awesome opportunities for workers positioned to take advantage of the next growth surge. But it has become difficult to anticipate where the next growth surge will be taking place. Many of us need to leave the fields we have gained experience in to continue to move forward in our careers. But only those who have put aside substantial amounts of savings early in life feel free to take the risks needed to take full advantage of the new opportunities.

Possession of a savings cushion allowing one to take risks not viable for most others has become a luxury. It’s the savings cushion–not the things that could have been bought with the money instead–that provides a rare comfort in modern times. Aim your personal finance planning efforts at freeing yourself to retrain for more fulfilling and more financially rewarding jobs, and you’ll become one of the world’s most effective savers in no time.

We All Crave More Free Time

Yet another luxury in today’s world is free time. All workers, from those earning minimum wage to those earning six figures, complain of the busy pace of modern life. Earning a high income and buying lots of goods and services offers no special status in this regard. High-earning lawyers and doctors are suffering from the same tensions as all the rest.

Money Answers

Spending money on massages or on housecleaning services can ease the pressure a bit, but cannot eliminate it. But achieving financial independence does eliminate this bane of modern life. The day I retired from my corporate job is the day I entered a world of luxury. I don’t spend any more than before. But I enjoy the rare comfort of having time to think amid all the hustle and bustle. Is the pursuit of the luxury of more free time likely to make your personal finance planning more successful? It is. This sort of approach has worked for hundreds of Passion Savers, and it can work for you too.

When I was in the process of altering my savings goals, I never took any action that I viewed as a sacrifice. It wasn’t necessary. I was able to meet all my goals by taking steps that added to my sense of well-being by making me feel more secure about my future and by bringing the dream of independence closer to reality.

If you think of luxury in this new way, there is no such thing as a savings goal that is too “extreme.” It does not make sense to view steps in the pursuit of more fun, more freedom, and more fulfillment in negative terms. So long as those are the goals of your personal finance plan, you deny yourself nothing in going after them ever more intently.

There’s only one downside to this new way of thinking about personal finance plans. Once you experience the benefits, you can’t imagine going back to the old approach to spending. Luxury is hard to give up once you become accustomed to it.

Six Tips for Building Self-Confidence by Saving Money

Set forth below is a list of six tips for building self-confidence by saving money.

Building Self-Confidence Tip #1: Practice self-affirmation in a concrete way by making regular progress in your quest for financial freedom.

Building Self-ConfidenceThere is a good reason why self-confidence is hard to acquire and hard to hold. We live in a dangerous world. “Happiness can come suddenly, and then can leave you just as quick,” Bob Dylan observes in a recent song.

Many rely on self-affirmation to keep their belief in themselves strong when working through hard times. There’s a place for that. But we all at times need something more concrete to look at to convince us that we really are useful and good and special. Effective saving gives us what we need.

Save well, and each year you will acquire a greater level of financial freedom, a greater ability to decide for yourself how you will spend the hours of each passing day. That’s something real that offers solid proof that you are making progress over time in your quest to leave your mark on the world. Money in the bank is a coined self-affirmation.

Building Self-Confidence Tip #2: Think of your budget not as a spending plan, but as a Life Plan.

Things that we plan for are the things that get done. Most of us do not get excited about the idea of planning our spending for a perfectly understandable reason–a spending plan is just about money, and money is not what it is really all about, is it?

It’s not. But a budget is not properly viewed as merely a plan for spending. Most of the Life Goals we pursue are fueled by those little green pieces of paper we refer to as “money.” So when we plan what we will do with our money, we are really planning what we will do with our lives.

Make a Life Plan, and you will feel a greater confidence that you will have what it takes to stand up to the big, bad world and handle whatever it has to dish out to you. Without a plan, you are always unsteady and subject to surprise setbacks. With a plan, you have what it takes to keep your cool in the heat of life’s sometimes wicked battle.

Building Self-Confidence Tip #3: Develop the financial cushion you need to fight for a bigger paycheck.

People who value themselves and others by making reference to the size of their paychecks are fools. The connection between the size of one’s paycheck and the value of the contribution one makes to the world with the work one does is too weak for this approach to assessing self-worth to have great validity.

That said, you can’t help but to some extent to think that you are doing better with your life when you are earning more than when you are earning less, can you? I know that I always feel a surge of joy when I am awarded a pay raise, and it’s not just because I will be able to buy more stuff. It’s partly because someone whose opinion I value has made an assessment that I have done the job assigned to me and then some. That’s a confidence builder, is it not?

There are times when you have to fight for your pay raises. There are times when your employer will not turn over the money without first putting you through a tough negotiation process. Which employees are best positioned to get the full pay raise they deserve? The ones who save well.

You Can Do It!

Why? Because the employee with a nice financial cushion can afford to push harder in pay-raise negotiations. The employee who lives from paycheck to paycheck cannot afford to be too assertive. The effective saver can take the small risk of losing her job that goes with an assertive negotiating stance because her world does not fall apart if the worst-case scenario comes to pass.

Building Self-Confidence Tip #4: Develop the financial cushion needed to fight for non-paycheck conditions of employment.

It’s not just in the area of negotiating bigger paychecks where the effective saving worker possesses an edge over his peers. Those who save well are also positioned to negotiate well for non-financial benefits.

I did this when I was promoted to a new position and wanted to be sure before taking it that I would have the support from higher-ups needed for the new department that I would be heading to be successful. I had enough money saved at this point that, if worst came to worst, I knew I would be okay. So I felt comfortable pushing just a wee bit harder than I otherwise would have for what I needed.

Win that sort of negotiation, and you will feel a swell of self-confidence, I guarantee you. It’s not just that you got what you wanted. It’s that you got what you wanted by making use of your personal skill-set. Win that sort of negotiation, and you will feel like running out into the street yelling “I did it! I did it!”

Building Self-Confidence Tip #5: Use money to smooth your journey through life’s difficult transitions.

Nothing so threatens your self-confidence as working your way through one of life’s difficult transitions–the loss of a job, the end of a romantic relationship, the need to move to a place where you have few friends. Money helps.

Money allows you to respond to the job loss by putting your energies into that idea for a start-up business that you have been carrying around in your head for years now. Money allows you to respond to the end of the relationship by joining an exercise club or buying a new car or new clothes. Money allows you to respond to the need to move to a place where you don’t have many friends by meeting some at plays and by signing up for races and by going out to restaurants.

The New YouMoney can provide you the pick-me-up you need when the world has let you down. It makes sense to save when things are going good to be positioned to bounce back when things go bad.

Building Self-Confidence Tip #6: Appreciate the cultivation of your unique identity that often is a part of effective money management practices.

It doesn’t take much independent thought to spend. With all the spending enticements that surround us in this Consumer Wonderland, you can spend it all just by going with the flow.

Saving is different. To save, you need to think things through and make choices. You need to say “I want the money to go here and not there.” Those choices reflect your personal take on what matters in life. They tell the world what this unique entity known as You is really all about. When you find yourself taking a path different than the one that most others take, you can’t help but develop a fresh understanding of your specialness.

Pay off the mortgage early? That’s different. Cancel cable? That’s special. Choose to spend your vacation visiting the tourist attractions in your own town? That’s unique.

People trying to sell you things often try to entice you by suggesting that buying the product or service they sell will bring out in you the better version of you lurking inside. Sometimes it’s even true. But it’s more often true that a decision to save makes you feel that there really is something about you that is–unique.


People trying to sell you things often try to entice you by suggesting that buying the product or service they sell will bring out in you the better version of you lurking inside. Sometimes it’s even true. But it’s more often true that a decision to save makes you feel that there really is something about you that is–unique.

Our Community’s Ideas on the Best Ways to Save Money

Best Ways to Save Money Tip #1 — A Calculus of Saving

A recent thread at the Vanguard Diehards discussion board explored the question of whether those who save more than most might end up regretting the choice.

Posters participating in the thread argued that:

1) You’re only young once. So, if you put money aside instead of doing fun stuff, you might not have another chance;

2) It’s possible by saving effectively to retire early. It might be the best of all worlds to attain financial freedom while you are still young enough to do a lot of fun stuff;

3) Opportunities to have fun are not necessarily gone at age 30. There are some ways in which those who are in their 50s are capable of having more fun than those in their 20s;

4) Fun stuff needn’t cost much. How much does it cost to go bike riding?;

Best Ways to Save Money5) The feeling of security and freedom that comes with saving makes everything you do in life more fun than it would otherwise be;

6) The most important factor in determining your long-term financial health is how much you earn. So it can be a mistake to focus when you are young on saving and investing over career growth;

7) If travel is important to you, you need to keep in mind that it is easier to travel before you have kids;

8) The things you save for might not prove as beneficial as you hoped. You might save to send a child to college and he might not apply himself to his studies;

9) You generally have the least amount of money coming in when you are young and when you are old. So it makes sense to save the most in the years in-between those two extremes; and

10) You might die young.

Best Ways to Save Money Tip #2 — How to Say “No” to Requests to Contribute Money

Outstanding Money Saving Ideas

When you feel uncomfortable saying “no” to a request to contribute money that you don’t want to say “yes” to, describe a specific alternate purpose to which you must direct the money at stake. For example, say “I can’t give now because I am trying to put together $1,000 to pay for a family reunion that my spouse and I will be attending out of town in about two months.”

The reason why it is hard to say “no” to requests to contribute money is that the requests are specific while the alternative to giving is presumed to be a general desire to save money. Specific claims always appear more pressing than general ones. This is why journalists often open newspaper or magazine articles with anecdotes illustrating the point made in the article. Specifics have an emotional pull that abstractions lack.

When someone who wants to say “no” to a request to give describes a specific alternate use to which the money will be put, there is no lack of feeling towards the object of the contribution implicit in the rejection of the contribution request. In these circumstances, the person being asked genuinely “cannot afford” to make the contribution.

Of course, there is always a good reason why one cannot afford to make a contribution that one does not want to make. The key to rejecting the request diplomatically is focusing on the alternate use of the funds rather than on the rejection of the use of the funds being promoted by the person requesting the contribution.

Best Ways to Save Money Tip #3 — Are Product Add-Ons Worth the Money?

More and more products today are sold with add-ons that the salesman tries to entice you to buy after obtaining your agreement to the core transaction. The add-on concept takes advantage of the approach that consumers generally take to determining whether to go along with an enticement to spend or not. We all spend more on restaurants and entertainment when we are on vacation because we justify higher levels of spending with the reasoning that “I’ve already spent x amount on the plane fare and on the room, so spending y amount more is not that big a deal and is worth it if it insures that I have fun.” We often apply this sort of reasoning (rightly or wrongly) when the price of the add-on is small relative to the amount spent on the core transaction.

Getting Serious About Saving Money

Add-ons usually provide high mark-ups to the seller. Thus, they are often criticized as “not worth it.” The reality, though, is that whether the add-on provides a good value proposition or not depends on the desire felt by the purchaser for the benefits of the add-on, not on the mark-up obtained by the seller. The Apple Care service, in which Apple Computer helps me with problems with my computer, no doubt provides a high profit margin to Apple. But it is worth the price to me because of the combined effect of the great frustration I feel when things go wrong with my computer and my seemingly impenetrable inability to figure out what to do about it.

What’s really going on with add-ons is that sellers of goods and services are finding a way around the resistance that many consumers feel to the idea of spending money on many services that offer good value propositions to them. Attempts to sell an Apple Care service to people who were not buying computers would no doubt fall flat. At the moment at which a computer is being purchased, however, people who would ordinarily reject the idea of making such a purchase instead say “yes” because they can justify in their minds paying a small additional expense to insure they receive value from the far larger dollar amount directed to the purchase of the computer itself. Everybody wins when that sort of add-on is purchased.

Best Ways to Save Money Tip #4 — Your Kids — A Profit Center

It is a mistake to view a child solely as an additional expense. There are of course costs involved in raising a child. But there are also a number of ways in which having a child causes the parent’s income to increase. In many cases, having a child is more a financial plus than a financial minus.

Three examples:

1) Many people do not keep budgets until they have children. Thinking about financing a child’s college education forces a parent to begin looking far into the future, often for the first time in his or her life. The benefits of budgeting are so great than the long-term benefit of keeping a budget as a first step to financing a college education may be enough to cover much of the financial loss associated with paying the tuition expense;

2) Having a child provides a new source of powerful motivation. Many of us are highly motivated in our jobs in the early years of our careers, but are beginning to see our work as “the same old thing” by the time that a child enters the picture. Having to make money to support the child and help the child be all that he or she can be can re-ignite our ambitions;

3) Interaction with a child can cause an adult worker to get out of a rut and form new ideas as to what work he or she really was put on earth to do. A parent teaching a child how to draw may recall how excited she once was about drawing, seek a change to a career that takes greater advantage of her drawing talent, and end up in better financial shape for the long term as a result.

Best Ways to Save Money Tip #5 — Good Debt, Bad Debt

Good debt is debt that is being incurred for the purpose of generating future income. All other debt is bad debt.

Best Ways to Save Month

 Thus, it makes sense to incur debt to obtain a college education (but only if the education is pursued in a serious way, so that it is likely to generate income down the road). And it makes sense to incur debt to purchase equipment needed to launch a start-up business that one has prepared for adequately. And it makes sense to incur debt to purchase a home if the home is purchased at a price that will not cause long-term financial strain and that justifies expectations of long-term capital gains.

It is not a good idea to incur debt to go on a vacation or to buy a new car or to replace the dining room furniture. Incurring debt for these sorts of purposes adds a new item to the cost of living–the cost of paying off unnecessary debt.

There are some items that are in a middle-ground. For example, it could be argued that incurring debt to have one’s teeth straightened could generate income down the road because it would make one more successful in job interviews. There is a danger of one’s mental energies being put to use forming rationalizations justifying debt in these sorts of circumstances. The best rule is to avoid debt in these sorts of circumstances unless the case in favor of it appears compelling.

Best Ways to Save Money Tip #6 — Spending on Birthday Celebrations

Parents can save money by electing not to celebrate their child’s birthdays with event-type parties (hiring a clown to come to the house, etc.). Instead, they can make the day special by allowing the child to do something that he or she has not done before on the grounds that he or she is now “old enough.”

One birthday could be celebrated by permitting the child his or her first sleepover. Another could be celebrated by taking out a library card in the child’s name. Another could be celebrated by taking the child into the city on a Saturday to ride the subway train, look at the tall buildings, and visit mommy’s or daddy’s office. Another could be celebrated by taking the child to a “real” restaurant for the first time.The child will likely end up with plenty of presents from relatives even if the parents only buy one or two. And the child will remember the day as one having had special significance.

Best Ways to Save Money Tip #7 — An Out-Of-Fashion Saving Tip — Say Grace Before Meals

You overspend because you are dissatisfied.

So the way not to overspend is to become satisfied.

Saving Money Tips

You often can’t get there by spending more. Spending more in circumstances in which a lack of things isn’t the real problem often just exacerbates the feeling of dissatisfaction. You’ve heard about those mice that get so mixed up by the experiments run on them by scientists that they end up pushing those pellet-levers like crazy? The Consumer Wonderland can make us experience those sorts of feelings, except that it is our credit card we hand over mechanically rather than a pellet-lever we push mechanically.

Having things doesn’t necessarily cause the feelings of dissatisfaction to go away. You need to appreciate the things you have. You need to let in the awareness that you have it pretty darn good.

You need to call things to a stop several times each day and focus on the good stuff that’s coming in to you on a regular basis. A good number of us were taught to do that by saying grace at meals. A good number of us got out of the habit. A good number of us would benefit from giving the idea another try.

Food is not an automatic. We tend not to worry about where our next meal is coming from because there have been so many meals that have come in on a regular basis that we have come to take it for granted that we will always have something to eat. It’s nice that the meals are always there. It’s not so nice that we don’t get a flash of good feeling anymore from seeing a meal show up at the table.

Having another meal show up really should be a cause for a small celebration. Having a meal means you get to go on living another day. And food tastes good. Eating food inspires conversation. Eating is one of the joys of life.

Express gratitude and you will begin to feel the gratitude you really should feel. Feel gratitude and feelings of dissatisfaction will dissipate. As feelings of dissatisfaction dissipate, you will find yourself less frequently tempted to overspend.

You will save more. You will invest the money you save and earn nice returns on it. You will find that more and more your money is working for you instead of it always being you working for money. You will be on your way to becoming rich!

Saying grace is so easy. It costs nothing. It takes no skill. It uses up very little time.

It changes how you think about things. It leads to other positive changes in outlook.
Money Saving TipsOur parents and our grandparents were right about some of the things they told us. They were right about this one.

The fundamental rules apply as time goes by. Bow your head and thank God for what you have been given today.

Best Ways to Save Money Tip #8 — Savers Notice Taxes More

I became more aware of the effect of taxes when I began saving effectively.

When you are not saving, your money management rule is — spend what you earn, and then stop. Taxes are just one more expense. They are no one’s favorite expense. But the tax factor does not seem like that big a deal because taxes are much like a good number of other expenses that all get mixed together in your mind.

When you are saving effectively, you notice that there are some expenses that can be avoided (like vacations and entertainment) and some that cannot be avoided (like health insurance and electricity). You see that the worst sort of expense is a large unavoidable expense. Taxes are a large unavoidable expense. So you come to see how much more harmful this expense is to your desire to achieve financial freedom that you realized when you were following a different sort of money management rule.

If taxes that could be made optional were made optional (if we could elect to pay them or not with the understanding that we would be denied the service paid for by the tax money if we did not pay), effective savers would pay lower taxes than non-effective savers. The non-effective savers would generally not put much effort into determining which tax-financed programs gave them a good deal and which did not. The effective savers would put more effort into the project of determining which tax-financed programs were worth the expense and would elect to pay less taxes as a result.

Savers notice the effect of taxes more than do non-savers. Saving effectively causes you to look at all sorts of money topics in new ways.

Best Ways to Save Money Tip #9 — Momentum Spending

When there’s a hit movie, it causes the box-office numbers to go up for all of the movies out at that time.

When the weather is bad in July at a beach town, it causes fewer people to visit the beach town in August.

If you haven’t bought a piece of furniture for some time, you are less likely to buy a piece of furniture than is someone who recently bought a piece of furniture.

Great Ways to Save Money

These are counter-intuitive phenomena. Intuitively, you would think that people would have but so much money for movies and a decision to see one would mean that they could not spend as much on the others. Intuitively, you would think that people who missed out on enjoyment of the beach in July would have a greater desire to enjoy it in August. Intuitively, you would think that people only need so much furniture, and that those who have just purchased some would not be in a furniture-purchasing mood for some time.

The reality is that making a purchase of a particular item reminds us of how much we enjoy it (if the experience is a good one). Spending doesn’t generally relieve us of the desire to spend. Spending begets more spending.

Momentum Spending is a good thing. When you enjoy a movie and the experience causes you to fit more movies into your schedule as a result, you are directing your money to something that provided you a strong value proposition. Maximizing the life enhancement obtained from your limited financial resources is what money management is all about.

What you need to look out for is Habitual Spending. Say that you enjoyed one movie enough that you went to the movies the next three weeks in a row and enjoyed those three movies too. That’s a good thing. Now say that you continue going to the movies for the next 20 weeks because it has become a habit and that out of that group only six leave a truly positive impression while another six are so-so and eight are clinkers. Now you’ve put your movie spending on automatic. Now you’re wasting both money and time. Now you’re failing to obtain the greatest possible life enhancement from the dollars available to you.

Momentum can cause you to refrain from spending too. Say that you see four clinkers in a row, get fed up with movies and find a new way to spend your Thursday nights. Time passes, and you take note one day that you haven’t been to the movies in three months. Going to the movies now offers a great value proposition. Chances are that, having been away from the movies for a bit, you will enjoy what you see more than you would have had you been in a habit of going to the movies every week. You also will be able to be more choosey about the movie you see because you won’t have seen anything that is currently making the rounds.

If you’re in a movie groove, ride that wave.

If you’re in a movie rut, try something else this Thursday.

If you haven’t been to the movies in awhile, go check the listings.

Best Ways to Save Money Tip #10 — Five Reasons Not to Buy a Video-Game Player

Good Ways to Save MoneyThe video game phenomenon incorporates all of the elements of the worst spending categories. It is a purely discretionary expense. It is an expense that brings on an addiction that needs to be funded for years to come. It is an expense that involves a high one-time expense (for the game player). It is an expense where Keeping-Up-With-the-Joneses social pressures come into play. And it is an expense that involves a regularly occurring expense (for the games). This is an expense that is bad for your financial freedom dreams in five different ways!

Parents are teaching their children bad lessons by giving them easy access to money to be used to finance a video-game habit. And this is not an expense where parents can realistically try to turn the experience into a positive by encouraging their children to finance the habit themselves. The prices are too high for that to work in most cases.

I do let my boys play PacMan when we go to Pizza Hut. That sets us back 50 cents once or twice a month.