A Good Four-Letter S— Word: Save

If having savings is a good thing, why does the act of saving money get such a bad reputation? Do we dread saving money because we live in a world of instant gratification and don’t have the patience to spend our money later? Maybe. Is it tough to accumulate savings when we have other bills to pay? Of course. Do we sometimes get overly enthusiastic when we first start saving, only to jump ship halfway? It happens. How do we overcome these obstacles?

Delayed Gratification

If you were given a choice between winning a new electric scooter or a trip to Disney World, which would you choose? You’d probably choose Disney World because it’s more expensive. What if you can get the scooter now, but the trip requires waiting three years? You’d switch to the scooter, wouldn’t you?

Wait a second! Just a moment ago, you wanted Disney World, remember? Don’t let short-term impulses get in the way of your long-term dreams. If you want something bad enough, it’s worth waiting for. That’s the power of delayed gratification.

(In case you are not a Disney fan, feel free to substitute your own dream purchase in this scenario.)

Automated Savings

Balancing savings and expenses can be a challenge. One solution is to budget, so that your savings take a dedicated amount like any other bill.

Another way to prioritize saving money is through automated savings. Whenever money comes in, whether it be allowance or working income or gift money, automatically save a portion. Direct deposit makes this easy by routing a percentage or dollar amount to an account, which you can assign for a specific purpose.

Celebrate Small Victories

The hardest part about saving may be the journey to reach your goal. It’s easy to lose sight or get distracted if you don’t celebrate small victories. Consider giving yourself a little boost or reward for reaching milestones along the way to your goal. Buy yourself a keychain or take a test drive at the arcade after saving $200 towards your first car. Reward yourself with pizza every time you reach a big step towards your dream trip to Italy. You get the idea.

Parents can help by throwing in a savings match. For instance, offer a nickel for every $1 dollar that your child saves or alternatively, pitch in $5 after your child reaches $100, $10 after reaching $200, and so on. Little incentives go a long way with motivation!

Yes You Can!

Savings takes work. But that work can be fun once it’s automatic and if you put the savings toward an achievable goal that excites you. Figure out what it is that you really want, and then start saving!

Tune in next week to learn how much you should be saving. Or subscribe below to automatically receive weekly lessons in your inbox!

Homework: The next time you are faced with an impulse purchase, ask yourself if you would rather save the money towards a bigger goal. Think of a goal you really want, something that shows saving money is good!

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What Is The Right Price?

As a child, I grew up watching TV game show “The Price Is Right.” But often, I knew the price was NOT right because their prices reflected full retail value, and every one of those goods could be purchased for less.

This begs the question: What is the right price?

Granted there are some items that you cannot pay anything but full price. Taxes are an example. But you’ll find that the vast majority of material goods can be found at a lower price than MSRP, or manufacturer’s suggested retail price. Even services, like a haircut or hotel stay, have deals or discounts if you take the time to look.

target price

That is why you should find what I consider the target price. How much could the price be after a discount? What is the item worth, in other words, what is its value? Most importantly, what is the item worth to you? Practice giving yourself an ultimatum: “If I cannot buy this $35 item for under $20, then it goes back on the shelf.”

Some ways to reach the target price:

  • Get it on Sale
  • Apply a Deal or Coupon
  • Wait until inventory clearance or a new model enters the market
  • Consider getting it Second-hand
  • Negotiate if the situation allows for it

You may find that you miss out on an opportunity because your target price estimate was too low. That’s ok. You will adapt. And hey, it saved you from spending money this time. So the next time you go shopping, play the target price game and see if you win!

Homework: Visit your favorite store and without looking at the price tag, determine a target price for the item you want. As a bonus challenge, resist any urge to buy immediately, and wait at least 30 days to see if you are still interested in making that purchase.

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