To break up the hours sitting in an office chair and looking at a computer screen, I generally try to walk for a half hour during my lunch break on a local public rail trail.  The path is shady, the view is stunning, and lack of distractions is spectacular!

During my walk the other day, I stopped to talk to a middle-aged man who was drilling some wooden planks into a broken part of the railroad that connects the woods over a small lake.  I’d observed that these planks had been decaying one-by-one for months, and the damage was getting to the point where the missing boards were posing a legitimate danger to inattentive walkers.  The man had apparently noticed the same thing and was spending a portion of his afternoon repairing the broken sections with his own tools and expertise.

I was genuinely touched by his compassion and asked him what inspired him to take on this work. Most people would have done nothing or just called the city to complain (same result).

“Well,” he replied, “to tell you the truth, I won 100 bucks today on a scratchie. Since I knew I was probably just going to blow the money on more scratchies, I decided to take the cash down to Lowes, buy some planks, and fix this darn path.  I ain’t exactly the ‘savings type’ so thought I should spend the money on something useful.”

This quick interaction with “Mr. Scratchie” got me thinking (again) about how little we teach people about saving money.  We teach children how to write in cursive, dissect owl pellets, make paper snowflakes, play Hot Cross Buns on the recorder, and even forge a river on the Oregon Trail without dying of dysentery, yet we spend no time teaching them how to manage even a modest amount of money.  Indeed, there is no greater failure of our school systems than the lack of financial literacy.

Nonetheless, every adult is faced with countless financial decisions every day. For example:

“What percentage of my income should I prioritize to paying off my debt, vs. investing in stocks/bonds/businesses, vs. additions to my 401k/IRA to save for retirement?”

Whoa, slow down, Centsei!  Way too deep for your 5th post! We’ll tackle this in the next post.  Let’s break this down.

What percentage of my income should I devote to paying off my debt vs saving for retirement?

This, too, is an important concept, but let simplify further.

What should I devote to saving for retirement?

Now we’re getting closer…

What is saving?

Much better! Let’s first distinguish between (genuine) saving and (fake) “SAVING” since advertisers even use this term in a deceptive manner to separate you from your money.

“Saving” will refer to money that you put away for future use.  In other words, the time-shifting of your financial lifeblood.   Saving is essential to building your long-term wealth, and it is important to save as early and often as you can, regardless of your age and salary.  You can look at saving as the difference between you income and your expenditures.  The greater percentage of your income you save and the better you prioritize these savings, the more financially successful you will be. 

“SAVING” will refer to the deceiving term used by advertisers to deceive you into spending more money, not saving it.  You know the lines

• SAVE 25% off MSRP with this coupon! 
• Special SAVINGS when you shop today! 
• Buy one get one free!  That’s $35 in SAVINGS! 
• Choose between 0.9% financing or SAVE $2,500 when you purchase directly from our dealership this weekend!

Ironically, ads even have terms that involve spending money: “Retail Price…” “Shop today…” “Buy one…” “Purchase directly…” Yet, we fall into the trap and convince ourselves that we are saving, not spending.  This is no coincidence.

You cannot save money if you spend money. A discount at checkout is not at all the same as an investment in your future. The latter gives you choices, the former takes them away. The concept seems so simple but is lost on so many. Knowingly or not, we turn a blind eye to our self interest as we salivate about “spending less,” “getting a deal” and “coming out ahead” for a particular purchase.

Spending less than what? Getting a deal from where? Coming out ahead of whom?

Advertisements are designed to turn up our short-term impulses and turn off our long-term judgment completely.

The point is hardly profound: You cannot save money if you spend money. Saving is not the same thing as SAVINGS, as tirelessly as advertisers work to convince you otherwise. Every unnecessary dollar that you spend today is one step farther from financial freedom and one choice fewer that you’ll be able to make tomorrow. $1 saved today is $10 more that you could have in retirement, assuming 35 years and a 7% return. There is no better “deal” than that.

This isn’t to say that you shouldn’t fix a broken path every once in a while, but no person should be resigned to the label of not being “the savings type” just because they never learned how. And certainly no person should be tricked into spending money under the guise of getting a discount.

You can, you should, and you will learn how… but only if you subscribe, leave a comment below, or SAVE this blog to your favorites!

Oh, and if you’re curious how Mr. Scratchie’s work turned out, I took a picture of it today.