During my two-year round-the-world trip, Will and I spent hundreds of nights camping in Australia. We camped nonstop for about 7 months, or 210 consecutive nights.
When we told friends that we were camping, they remarked, “Think of all the money you saved by not staying at a hotel!”
We never would have stayed at a hotel. I was backpacking the world for two years. If hotels were our only option — if camping wasn’t a consideration — we wouldn’t have gone to Australia. We would have stayed in southeast Asia, where guesthouses are much cheaper.
That comment from friends, though, formed one of my ideas about what it means to “save”:
You’re only “saving” money if you legitimately would have made a purchase, but refrained from doing so.
Savings, in other words, happens when we deviate from our habits.
“Today I saved $200,000 by NOT buying a Bentley!”
I’m going to assume that most people reading this blog post don’t eat caviar and fly on private jets. Does that mean you’re “saving” money every time you fly on a commercial airline?
Of course not. That’s ridiculous. You’d never entertain the notion of a private jet, so you’re not “saving” money by flying Delta or United. You’re just acting out your normal routine.
If you break that routine – if you skip your normal holiday trip to grandma’s house — you’ll be saving money. (You’ll also be upsetting granny.)
If you’re in the habit of getting weekly carwashes and pedicures, and you change those habits, you’re saving money.
You’ve purchased something in the past. Then you stop buying it. You change your habits. You alter your lifestyle. NOW you’re saving.
Don’t listen to people who say you’re saving money by NOT doing something that society considers “normal,” like driving an awesome car, sleeping in posh hotels or dining at fancy restaurants. If that was true, people should also say, “Think of all the money you’re saving by NOT skydiving twice a week!”
There’s nothing wrong with any of these purchases, assuming you’re not going into debt for them and you’re saving at least 20 percent of your income. You’re just not “saving” if you opt out.
So … What Should I Do With This Information?
If you actually want to “save,” harness your energy and attention towards changing one habit.
Quit getting pedicures. Stop buying soda. Don’t eat out as much.
It’s great that you’re not succumbing to lifestyle inflation, but don’t pat yourself on the back and stop there. If you want to save, change one existing habit.
Take it one step at a time. Trying to “change it all” rarely works. Tweak one habit, stick with it for 30 days until it becomes a new habit, and then move on to the next one.
Most importantly: invest your savings. If your mental focus is centered around frugality, you’ll have a tough time getting ahead. But if “saving money” is a stepping stone that allows you to invest more, you’ll soon become a rock star.
This is the second post in my new article series, The Habit Project – which looks at how we can weave new habits into our daily lives.
Thanks to the blog Faithful With a Few for featuring one of my posts in the Carnival of Personal Finance.