During a conversation last week a friend of mine admitted he found saving hard to do. I asked him why he thought that was. It was interesting to note that he said “You don’t seem to have much after doing it.”
Perception is a rather key thing with our minds and even more so with something astract as money and what you personally want money to do. As my friend indicated saving is less about the actual results of saving, but rather people perceive it to be a lack of spending. In order words some people focus more on what they could have bought with the money than the possible results of saving.
I suspect this gap exists in people’s perception because saving money takes a long time to create anything impressive. Really for each dollar you saving you get about a whole four cents of ongoing income over a long period of time assuming it is properly invested. Hardly impressive, actually it’s almost depressing to realize it is that low. It’s only by slowly saving over years do you get to do anything truly impressive like buying a car for cash or after a really long time retire a decade or two early.
On the flip side of this I think perhaps consumer debt repayment is much sexier since the interest rates are much higher it is much easier to see some results. If you are paying 18% interest it is fairly easy to see a significant drop in your interest payments over time with some debt repayment.
In the end saving is about shifting focus from short term gains to long terms gains. Yes you don’t buy something today by saving, but rather you are buying a tiny bit of a future dream. So slowly over time you end up where you want to be. I wonder if this sudden mass acceptance of frugal will last and people will at least consider keeping some savings in the future. Have we shifted a little bit from the “NOW” attitude to a bit of “I’ll do that later.”
What’s your thoughts on this: why is saving hard?