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to withdrawal a portion of her savings to cover living expenses and suffers the loss not only of the nominal amount withdrawn but of the much larger amount representing the long-term compounded value of the amount withdrawn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