Making Ends Meet

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Well, guess what- you can’t save money if you are spending it.

Saving money means one thing- you save it. You know, in something like a SAVINGS account.

I think maybe the reason we, as an American population, does not save is that we have misused the word so much that we don’t know what it means.

It does not work like this-
“Do you save money?”
“Yeah, sure, I mean, uh, I saved two bucks today when I used a double coupon.”

Again, spending money is not saving money. Pop Quiz– You slip through the “only one coupon per item” system and use twelve double coupons and only paid thirty cents for a huge brisket that would normally have cost $22. How much money did you save? The answer is not $21.70. The answer is NOTHING! You saved no money, you SPENT thirty cents.

It’s just a mind trick that we play on ourselves, thinking that we are always saving money when in reality we are only spending money.

The real trick to getting your money under control is using mind tricks. Having Yoda around would help. Unfortunately we have no way to Dagobah.

It has been common belief among economists for decades that humans, given two financial choices, will always choose the choice that is best for them. If you ever “accidentally” bought a car you will understand just how overwhelmingly stupid that statement is.

Almost every day we make financial decisions that make less than good sense. For instance- you have two choices- spend $2.00 on 20 ounces of Coke or spend $1.00 on 67 ounces? Spend $1 a night for movies for 22 nights a month or pay $17 a month for 30 nights of movies?

The reasons we make silly financial decisions is actually a whole line of study in itself- it’s called Neuroeconomics or behavioral economics. And it boils down to this- choosing a cold 20oz Coke when you are thirsty at the gas station is not the same decision as getting a warm 2 liter from the grocery story later tonight.

In other words there are lots and lots of reasons we make the decisions to spend our money the way we do.

That brings us back to the ways of the Jedi.

Just being aware that your mind and emotions can lead you down financial paths you don’t like can help you make the right decisions.

The biggest mind trick is a key part of what I teach in the Three Piece Plan.

When using the Three Piece Plan you separate out your “Everyday” spending money. This is a mind trick. Actually it’s a reverse mind trick- when your money is all in one place you think you have more to spend than you actually do– that’s the trick. And it’s what gets you into debt.

So you pull a fast one- you pull out your spending money, put it in a separate account and suddenly you don’t spend more than you should. Simple trick. Super effective.