You Have to Save It, Or It Isn’t Savings

Don’t forget it is Savings week here in our Back to Basics series!

I heard it all the time (even coming out of my own mouth):  “I saved $4.00 on this.”  “I saved 20% using coupons.”  While the intention is good, the choice of words is not.     Unless that money gets set aside, in a savings account, a retirement fund, or even a old mason jar, you haven’t saved anything.  You’ve economized, and freed up that money to be spent somewhere else, but that is not the same thing as saving.

I’ve been mulling over this concept for a while now and I think that it has the potential to profoundly alter the way that I look at spending and saving.  I love to get bargains, clip coupons, and generally spend less for things than the average shopper might spend on the same purchase.  As we all know, this sort of saving comes with all sorts of costs.  First, you have to spend money to buy a bargain.  It is still spending.  Second, bargains are often put aside for future use.  Yes, that birthday present might have been half price, but you are tying up your money in an object.  At the most basic level, it isn’t much different that putting money under your mattress.  Except that at least cash under your mattress can still be used as cash.  A cute birthday present for a four year old girl is useless if you never get invited to a birthday party for a four year old girl, or if it gets damaged before you can give it to her.

I also like knowing that we have money automatically directed to true savings.  TSP deductions come out before my husband gets paid, and IRA deductions are automatically debited from our bank account.  We don’t ever touch this money – this is true savings.  In addition, it is (hopefully) earning enough to outpace inflation and retain its value.

The shopping world uses the word “savings” in such a way that most of us have this twisted version of what it really means.  “Save 50%” on this deal still means that you have to spend 50%.  Again, if you already needed to make that purchase, and you put the “savings” aside into some sort of savings vehicle, then you have truly saved.  If you use the “savings” to purchase something else, you aren’t saving anything at all.  You’re just buying more with the same money.

I encourage you to think about this idea, and let me know what you think.

This post is part of our Back to Basics series.  Not sure where to start on your financial future?  Join us!

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Sarah

    My husband just said this, that people act like when they use a $1 off coupon, that one dollar magically gets deposited in their bank account!

    I personally try very hard NOT to coupon, because I have a terrible habit of purchasing things that I normally wouldn’t purchase, simply because it’s 50 cents cheaper. That’s dumb. Even if I end up eating the Dove ice cream bars or the frozen pizza, if I wasn’t already planning on buying a frozen pizza, then I’ve still spent MORE than I originally intended to spend at that shopping trip.

    I also have had other ladies appear shocked that I don’t get the local paper for the coupons. But unless you’re using $8 worth of coupons per week, you’re losing money by subscribing to the paper just for the coupons! So silly!

    Sorry, I am all for saving money on things you actually already need — for example I just bought swim diapers for my daughter today with a $2 off coupon — but overall I am rabidly against this new fad of hardcore couponing :)