Friday, January 25, 2008

Switch Set to Save

I recently read an article on one of many personal finance blogs that I've been perusing about how saving and investing is more a particular mindset than having a complicated investment strategy per se. The same writer also mentioned that for most people, there is a certain definable point in their lives when a switch flips and they transition from spenders to savers. And I think there's something to this idea.

For whatever reason, this January I had that switch flip in my head. I quite literally see everything differently now - my income, debts, spending habits, my financial future, a growing understanding of financial terms, an appreciation of how the global and domestic economies can impact me (and vice-versa). I'm not sure exactly what changed in me - part of it was setting personal goals for 2008. I did this in 2007 and it was a mixed bag of success and failure. But I didn't outline financial goals for myself. Part of it was that, for a few reasons, I had a small amount of cash on hand, and I can't remember the last time this was the case. Part of it was that I was sick of living paycheck to paycheck; I was sick of paying Citizens Bank overdraft fees every month; I was sick of not being able to participate in things because I was broke again; I was just sick of being broke all the time.

I've never thought of myself as a "spender." Mainly this is because I've rarely had the money to buy big-ticket items. But once I sat down and took stock of my spending over the past year and itemized my spending in January, I saw exactly how much and on what I was spending my money. I was a spender, but I just spent here and there in small amounts. I would inevitably overdraw my checking account balance, have to eat into my next paycheck to pay off the negative balance, and start in the hole for the next two weeks. It was a vicious cycle and I never had the discipline to just stop spending and play catch-up.

For the last few years I've always thought, "Oh, I don't make enough money to save," "I don't have a retirement plan at work," "This is something I can figure out when I get a better job." These were all excuses. After taking a look at my expenses, I not only see how I can save more, but I'm able to ensure that I'm saving a certain amount of money automatically monthly. I think this saving mentality is a self-fulfilling prophecy of sorts; in addition to the fact that I have real savings now for the first time since I graduated college, I'm already feeling reluctant to spend what money I do have on frivolous or transient things. For the first time in my life I feel like I am in complete control of my financial future. I have money in the bank, I have a plan for my short-term savings and retirement, and I've never felt better.

The switch is set to save. And I'm not switching back.

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