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Why There is No Such Thing as "Savings"

As I mentioned in a recent previous post, Financial Principles:  Lighthouses that Will Never Steer You Wrong, I want to expound on 10 financial principles that are absolute and unchanging and that if applied will dramatically change your financial life. Principle 3 of the 10 Money Mastery Principles is:

Money Mastery Principle 3: Savings Is Actually Delayed Spending.  Wealth and security depend on how you spend, not on how you save or on how much money you make.  There is actually no such thing as “savings” because every dollar is to be spent — what matters most is how you spend it.  This principle points out that you have to “spend” money each month for your future by paying yourself first.  People who pay themselves first add at least an additional $302, 000 to their retirement savings, while many find much, much more.

Any person can spend money, even a child.  You give a child $5 and they will spend it with ease.  What we all must learn is how to spend money for our future benefit.  Think of planning on a vacation to Disneyland in one year.  It is better to spend a little money each month into an account so it will be there when you go on you trip.  This is by definition is spending, not savings. You are “spending” money in advance for your trip to Disneyland.
The problem with the just thinking you must put money away is that you are doing so without any purpose. When money in savings is not designated for something specific, then you might spend it without thinking and not have it earmarked for higher priority items.  By putting money into a specific account for a reason you get into the mindset of having already “spent” the money, so it is no longer available.
If you establish an emergency savings account, when a surprise happens and you have this money available, it was already spent for this purpose, not saved.
I have given these examples so you can start to think differently, to spend your money, all of it, each and every month, spend everything by paying yourself first — before you give money to the grocer, credit card company, or utility service.   In time you will learn how to “spend” your money better and for the most in a way that is good for your family.  Learn how to spend and savings will take care of itself.  For more information on this, send me an email: peter@moneymasterylcom.  

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