Do Your Savings Make Sense?

Growing up, I celebrated nearly every birthday at an arcade. It was magical: bumper cars, skeeball, Bozo Buckets, Whac-a-Mole, and more. The lights and bells that signaled a win delighted me almost as much as the sound of the mechanism churning out tickets. Ever so gently, I would remove my winnings from the ticket dispenser, careful not to rip the last ticket. Then, I would delicately fold them up, trot over to the redemption counter, request that my tickets be counted, and promptly buy…nothing.

For the better part of a decade, I squirreled away tickets in my nightstand drawer. When that got too full, my mom helped me take them in and have them transferred onto a single certificate that could be redeemed at a later date. I didn’t know what I was saving up for, but it was going to be something big. Something meaningful. Something infinitely greater that any of the Fun Dip and plastic tchotchkes that my friends chose. I could buy a lava lamp, a microwave, a speaker system for my Discman. Yes, I would buy something important. 

And then I spotted going to the arcade. A handful of years ago, I finally returned as an adult. It was actually one of the first dates that Mr. P and I went on. Mini golf, bumper cars, greasy pizza – the very fabric of which romances are made. The best part of this date? I unearthed all my tickets. After conferring with the manager at the prize booth, they were all still valid. So, we set about distributing them to families. I can’t tell you how many parents laughed when I told them of my dashed dreams to save for something big and how many children squealed at the unexpected windfall. It was a blast. It was also the first time that I realized saving isn’t enough. The real power of savings happens when goals are attached.

Pay Yourself First

It’s an incredibly simple concept. It’s also the most solid foundation you can put under any savings plan. Put money aside. Even when you think you can’t. Even when you can think of fifty-seven other things to do with your money. Pay yourself first. It doesn’t have to be a lot, but it has to be something.

The first time anyone told me to pay myself first was when I was twelve years old. I had bummed a ride to the bank with my mom to deposit my babysitting money: $3/an hour paid in tollway change. Thankfully, my bank counted coins at no charge. My mom cautioned me to leave as much money in my account as I could, and I’ve followed that advice every payday since.

Give Your Money a Job

The problem with my arcade tickets was that I never put them to work. The initial intention was solid. Avoid impulse buys. Think things through. If you want something a few hours, days, or weeks after spotting it, then pull the trigger. The downfall of my arcade tickets, though, was that I never clearly defined their purpose.

When you give your money a job, it makes you want to work harder. It also encourages you to find ways to make your money work harder for you. Whenever I transfer savings into our account, I keep list of what that money is working towards. Since we have a fully-funded emergency fund, we currently have five savings goals:

• Long-term savings – Money that will max out our Roth IRAs every year.
• Debt repayment – Money to pay double (or more) on our mortgage every month
• Short-term “investment” savings – Money to pay Mr. P’s graduate school bills. It’s an investment because advanced degrees are the only way to earn salary increases as teachers.
• Short-term general savings – Money for the inevitable home repairs and improvements that will have to be made.
• Travel fund – Money to travel with every summer.  

Knowing that every click pushes more money into each of these areas motivates me to keep clicking. Saving isn’t painful. It’s thrilling. In addition to putting part of every paycheck away before paying any other bills, it’s a contest to see how we can reduce our expenses to push more money into savings at the end of each month. I don’t begrudge frugality; I celebrate it. Savings doesn’t feel like deprivation. Instead, because each dollar saved has a job, every transfer into our savings account is paving the way towards a goal.

Revisit Your Goals

Weirdo that I was, I would sometimes sit in my room and count my arcade tickets. Not because I wanted to spend them on anything in particular, but because I wanted to know how many I had. This approach is entirely wrong when it comes to tickets; it’s also wrong when it comes to money.

Thanks to electronic everything, bank account balances are accessible at the click of a button anywhere you data plan or wi-fi signal will take you. Think back to the past month. How many times did you think about your account balance? A handful of times, maybe even dozens. How many times did you think about your goals? If you’re not revisiting your goals when you revisit your balance, you’re counting tickets and not much else. As milestones are reached, as plans change, as life happens, goals need to be confirmed or revised. It’s the only way to make sure that your savings still makes sense.

So Tell Me…What are you saving for? How do you stay motivated to save?