Deny Yourself & Suffer

Denying yourself the small things in life can be misery.

In the last few years of so, if you've been reading most of the

information about personal finance that's been flowing from countless

sources you'll have heard about how it's the little things that add

up to big dollars. An example they give would be 'give up your $3

gourmet coffee every morning, or stop drinking 5 cans of soda a day,

and by the time you turn 65 you'll have an additional $100,000 in the

retirement fund'.

I'm not here to defend or attack the source of this information. Nor

am I going to say you shouldn't cut back on the caffeine, everyone

has to make a health choice about their life. What I am saying is

that by cutting out the little sources of pleasure in life, you may

be setting yourself up for suffering and unexpected misery.

The math behind the long-term projections by others who call

themselves "financial experts" is probably very sound. Over many

years, a few dollars every day will add up to a large chunk of change

just as their multi-year projections show. Everyone who has bought

anything on payments knows how a small payment each month adds up to

serious money after 30 years.

Being realistic is one of the keys to saving money. Is denying

yourself a couple bucks a day practical or even the best way to

accumulate future wealth? Is this the most fundamental and best

method you can use to be able to afford retirement?

I say the answer is no and no. While it is a very good idea to be

financially frugal, as in smart, it is irresponsible to think that

one strategy, one little adjustment in the day will improve anybody's

financial situation.

Why it doesn't work like they say

o What money? - In theory, by not spending $3 a day on your morning

gourmet coffee you will be saving $15 a week. In reality, that $3 a

day probably rides around in your pocket until it becomes an extra

candy bar for the kids, or another slice of pizza at the convenience

store. You might as well admit it; $3 lacks sufficient size to be

noticeable by itself, and if you don't notice it being spent, than

you won't notice it being saved either.

o What bank? - How do you put $3 a day into savings? Do you stop by

the ATM on the way to work and make a deposit? No, in fact, most

people stopping by the ATM are withdrawing a $20 or larger bill. If

you do drop $3 a day into your home piggy bank, how long will it sit

there? You have to have real discipline to leave the money there the

next time you have a 'small emergency' and need $10 for the paperboy.

Again, accumulating the $3 a day and making a trip to the bank once a

month sounds good, but in reality most Americans lack the discipline

to make it work. In fact, that is why the American savings rate is at

its lowest level in years - the average man on the street will not

discipline himself to put money away for the future.

o It is denial. - Day-in and Day-out denying yourself of one of

life's little pleasures can be terribly annoying when you have

nothing to show for it at the end. If the only change in your

finances you make is to cut out a cup of coffee, you will be horribly

disappointed when you have no more savings after a year than you had

before your money diet. Just like a food diet where you cut out one

type of food and the scale doesn't back down, when you cut out a

spending choice and your savings doesn't grow, you will be more

liable to throw your hands in the air and declare it to be an

impossible "Who cares".

What I say will work

Allow me to reiterate that simply stopping yourself from drinking

coffee on the way to work will not produce noticeable changes in your

savings account. Instead, consider implementing lifestyle-based

savings strategies you will see your piggy bank over flowing. I don't

have time to go into detail in this article, but when you overhaul

your lifestyle you might be able to have your coffee and save the

money too.

o Are you buying a mansion? - Americans as a whole have been on a

housing frenzy for a while and you have to make sure you don't get

caught up in the maelstrom. The best thing you can do your lifestyle

and of course your finances, is to do yourself right when you buy a

house. You don't need a mansion just because it seems everyone else

does. Buy a house that you can afford early in your working career

and then stay there. Imagine how much of your income you can save as

it increases over the years while your housing costs remain the same.

Again, the key again is lifestyle and discipline. Keep your lifestyle

simple, and have the discipline to put the unused money into a

savings plan.

o Family Matters. - The size of your family is a highly personal

economic decision, rightly guided by spiritual and emotional

reflections. With that said, however, you have to be aware that the

cost of raising a family is increasing at a rate faster than most

incomes. Consider the cost of child care, education, and spoiling

that child because both parents are at work.

o Driven by Expenses - Americans have loved cars ever since they

first came on the market. Unfortunately, the trend over the past few

years has been towards bigger, fancier, and costlier. Why spend extra

money on a new car, with the latest gadgets? Just like buying a

house, decide how large and what style of car you need, buy the best

one you can afford, and drive it into the ground. Many vehicles will

drive just as well after they are paid for as they did before. Stay

in the driver's seat on insurance costs as well, and you can rack up

serious money over the vehicles 10 - 20 year lifetime.

I don't want anyone to misunderstand me; you can save money by

cutting out the little things in life. The problem is that usually

the money not spent on the little things goes into buying something

else. Overhauling your lifestyle can make the little things count and

give you the discipline necessary to hang onto the money.

Even better, overhauling your lifestyle can result in real money for

your savings plan. Go ahead and drink a cup of coffee on your way to

work, and enjoy peace of mind knowing that you can enjoy one of

life's little pleasures after making changes in your lifestyle that

truly will provide for long term financial security.

Roger Sorensen

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