Everything and Nothing
I was casually reviewing the finances of a young couple a few weeks ago; all normal stuff. Item by item, we checked off my list. Then, we got to savings. "How much do you have in savings?"
"We have $25,000 in our savings account."
"What is that account used for?"
"It's used for everything. We just throw money in it whenever we have extra, and that savings account is used for everything."
"By everything, do you mean nothing?"
***Uncomfortable laughter arose from both spouses.***
I want to share a massive behavioral science hack when it comes to saving. If you just blindly and arbitrarily dump money into a savings account that's intended for everything, it's actually used for nothing. Why? Because when something is for everything, then every penny spent on something is another penny that can't be spent on something else. We become paralyzed; everything becomes nothing.
The natural next step is that we simply become hoarders. If our savings account is for everything, then there's no amount of money that's enough. After all, everything is a lot of money.....infinite money. Thus, we simply hoard.
Then, if we're hoarding money into an "everything" savings account, there's a series of opportunity costs:
We don't actually save for our future needs in life.
We feel guilty for spending money on wants.
We don't get around to investing for our future.
We don't even get close to opening up our generosity.
Everything stalls at the blind saving.
Here's my suggestion. Open a series of savings accounts. Name them. Give each a purpose. Needs savings. Wants savings. Then, in your monthly budget, specifically allocate money to them. Actually fund them. If you say you're going to save $500 in your Travel Fund savings account this month, move $500 into your savings account this month.
Once that happens, it's technically already been spent: travel. Therefore, there's no doubt what that money is to be used for. It's sitting in a dedicated savings account specifically for you to enjoy on a trip. No guilt. No second-guessing. No doubts. It's already been saved. Now, enjoy! The same goes for every other category. Be specific. Be intentional. Don't psych yourself out. Honor the promises you made to yourself.
This one little hack can transform our relationship with money. I encourage you to give it a shot!
____
Did someone forward you this post? We're glad you're here! If you'd like to subscribe to The Daily Meaning to receive these posts directly in your inbox (for free!), just CLICK THIS LINK. It only takes 10 seconds.