Investing, Money Management

Some Thoughts About Saving Money

I’ve been thinking about why people fail to save money and fund retirement accounts, and I think that I’ve come up with something.  “Saving money” is complicated.  Think about it.  How many different types of “savings accounts” are there?  Off the top of my head, I can list several: Online Savings Accounts, Money Market Accounts, Local Bank Savings Account.  Now, how many different types of “retirement accounts” are there? Roth IRAs, Traditional IRAs, 401Ks, Sep IRAs, 403bs, Roth 401ks, etc.  And “education savings accounts”?  ESAs, 529s, UTMAs, UGMAs.  These are just a few of the “account types” available for “saving money”.   It can get confusing.

After deciding the “account type”, a saver then must then learn about investing.  Should I buy Bonds? CDs? Stocks? ETFs? or Mutual Funds?  All of the above?  None of the above?  And once I decide WHAT to buy, I have to figure out Market Orders, Limit Orders, GTC, AON, Transaction Fees… The list goes on and on and on and on.  Figuring out what to buy, when to buy, and from whom to buy it can be overwhelming.

I’ve come to the conclusion that MANY people stay in debt because figuring out “how to save” appears to be too complicated.  Think about it.  Borrowing money is “simple”.  I know how much interest I have to pay, I know how long I have to make payments, and I can easily “do the math”.  Saving money is “complicated”.  Even if I manage to save some money in my checking account, eventually, I have to figure out “what to do with it”.  Should I put it into an emergency fund?  Should I fund my child’s ESA?  How about my wife’s Roth IRA?  Then, once I decide “where” the money should go, I have to figure out “what” I should do with the money.  What will my interest rate be?  What are the risks?  What are the rewards?  What happens when I work really, really hard to “save” $4000 in my Roth IRA and the stock market takes a dive and my $4000 turns into $2000?

I’ve yet to mention insurance, tax rates, inflation, or income limits.  So, what’s the point of this post?  Have I suddenly become “anti-savings”?  Am I suggesting that we all simply continue to borrow money because that’s “simple”?  No way.  What I’m suggesting is that, if you plan to be wealthy, you have to PLAN to be wealthy.  You need to learn as much as you can about as much as you can!  And, don’t wait until you’re “debt free” to learn about investing and investing accounts! Personally, I’ve mapped out my strategy for the next year, the next five years, the next 10 years, and the next 25 years.  I’ve taken the TIME to learn (a little) about investing and long-term money management.  Notice how this works.  Being broke and making payments is “simple”.  Building wealth and saving money can be “complicated”.

Over the next few days, I’ll write about my plans for the future, but I wanted to set the table and fully acknowledge that understanding the world of personal finance can be difficult,.  I’ve been writing about my personal finances for more than two years and I still have more “questions” than I do “answers”.  But, I’ll not let a “confusing system” keep me from building a future for my family.  In other words, my second job will be learning about managing the money I make at my first job.

8 thoughts on “Some Thoughts About Saving Money

  1. “Being broke and making payments is “simple”. Building wealth and saving money can be “complicated”. ”

    Wow, you hit the nail on the head. I felt like this at 23 years old out of college.

    It is much easier to be broke than to save and invest. Being broke require no discipline.
    Most young people take the broke and simple route

  2. I think that is a main reason many people don’t save or invest. Managing multiple type of accounts can be a headache. I usually recommend people to “KISS” i.e. keep it sweet and simple. So that at least you will be able to build some momentum on saving to get started.

    I suspect many people don’t want to think about their finances till it is too late when they are in debt, then besides the emotional problem of having no money, they have to manage multiple accounts in one go.

    I wrote about building momentum a few days ago,

    perhaps it can help the readers here,


  3. I’ve never thought about it this way before, and I have to say I agree. Me and my wife are working to build up our emergency fund to six months so we will be ‘focusing’ on investing next.

    Do you have a book or two you would recommend on investing basics? I’d like to get ‘up to speed’ a little before I go sit infront of someone trying to sell me something related to investing.


  4. Some of us don’t save money because we earn minimum wage. How much do you expect us to save?

  5. Minimum Wage..
    I realize that their are folks who earn minimum wage… but are you looking for a different job or working towards a situation where you earn more? As for saving, I can’t imagine that you’d be able to do much more than “get along” if you are making minimum wage.. unless you are living an extremely frugal, frugal, frugal lifestyle. Personally, if I were making minimum wage, I’d apply for 50 jobs a day until I found some place that would pay me more… or I’d work 2 or 3 jobs…

  6. Pingback: Posts I Enjoyed Last Week | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing
  7. I agree with what NCN said about applying 50 jobs till you get a better one. I’ve heard many people berate their jobs, their boss the pay, BUT, are not doing anything about it!

    Even if you are not earning minimum wage, I recommend that people go apply for jobs & go for interview just to get a feel of how much the market can offer. Most bosses just want you to stay where you are & tell you how lucky you are when you have a $100 raise. Remember, their job is not to make you rich. That is you job.


  8. Saving money is only complicated AFTER you learn that you should be saving in the first place. The old saying, “Knowledge is Power” couldn’t be more true when it comes to money. I was well into my thirties before it even dawned on me that saving money was something a responsible adult should attempt… no one in my life, family or friends, ever talked about money (unless it was to complain about the price of something or about how hard it was to make a ‘decent’ living). Most people I knew, and still know today, were more concerned with finances on a month to month basis – and rarely think about 20 or 50 years down the road, or even about saving for the next big expense this year.

    I give thanks constantly for two things – the first is when I discovered the paperwork for my husband’s 401k and a light bulb went off (free money! how could I have ignored free money??!!). And the 2nd is that when I turned to the internet for information and discovered personal finance blogs. Now, 10 years after ‘seeing the light’ I can comfortably say that we are the most financially secure and knowledgeable people in our family and circle of friends – never mind that we don’t make the highest income.

    Yes, learning about our savings options does require work and can be complicated, but first people have to learn that there are those options even exist. What joy there is in the simple knowledge of “I have options! There is a way to do this! I can have an easier life! ” I’m not happy about how complicated investing or saving can be – but I am THRILLED that there are so many choices available when I once believed there was nothing more than the ‘simplicity’ of debt.

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