Stop Saving For

Friends, it's time to start saving; it's time to stop saving for.

We hear almost every day about saving for retirement, a new car, a holiday vacation in the Pyrenees. There are advice columns, how-to workshops, and entire sections in bookstores. PBS devotes half of its pledge drives to shows teaching us how to save for something (all the while hopefully donating to PBS). But what might happen if we stopped saving for some specific goal and started simply saving.

Let's say you should be saving twenty-five percent of your expendable income. This means that if you make $400 a week and you spend $200 on rent, food, utilities, clothing, childcare, etc., you should be able to save $50 every week. If you spend $300 on these necessities, cut your savings expectation down to $25. Doing just this nets you $1300 per year (at $25/wk) that you can now put in a CD earning interest for one, five, or ten years. You should be able to find a CD earning 5%. That rate at $1300 gives you $65 extra dollars per year. That's like adding two extra weeks onto your year every year. And of course, since interest compounds, soon you'll have three extra weeks, four, and five. A weekly savings plan could easily become time in a bottle.

And the best part about this can be that you've got no goal. It's the difference between a crash diet to lose ten pounds and the decision to live your live more healthily. Saving to buy a car wipes you out once you've made your purchase; let's not even talk about the ridiculousness of trying to save "enough" money for retirement. Do you really want to be the guy who lasts longer than his money? Saving without a goal becomes automatic, as addictive as a Camel Wide on a hot summer night. And you don't ever have to be anxious or worry about your savings because there's no time constraint. You don't have to save $2000 by Christmas because you're not using it for Christmas anyway.

You might say you can't afford it. You might be right for all I know. But remember, I'm not talking about your whole paycheck. When you think about this 25%, do not include the money you need to pay the bills. That money is important and misplacing it, even to save, could do more harm than good. You may find that, once needs are taken into account, you've got $20 at the end of the week, and that crisp green Lincoln seems too sweet to waste away in some dusty old checking account. Well, tell Abe he's cooling his heels for a while. This kind of savings takes self control—more control than goal oriented savings. It's easy to squirrel money away for an ipod; much more difficult to save without purpose.

But, if we're not saving for anything, when do we get to use the money? What is the point of all this anyway? To this I say, if you are lucky enough to never fall on hard times, never to find that your personal surplus just became a deficit, leave the savings to your children. If you don't have children, leave it to your favorite charity. Trust me, once the habit starts, you won't miss it anyway.