You hear this a lot… “People are not saving enough money for retirement”. And that IS a big problem.
Here is an answer to why no saving enough is happening:
“One of the biggest reasons people don’t save is they fail to appreciate future gains. “People tend to discount the future very heavily relative to the present”, Milkman says. That means we prefer the instant gratification of a shiny car or fancy night out to the delayed benefit of a stable retirement.”
So, the concept of “saving money” is about putting money aside to be used at a later date. And since that is not very exciting… the natural tendency is to prioritize spending our money now.
And there is nothing wrong with immediate gratification… BUT what is really happening is people are spending all the money they make, and therefore have nothing left over.
In a lot of cases, people are spending more money than they make.
Here at Lifelong Financial Security, we concentrate on this problem. The point of is to figure out how to live below your means so you have money left over at the end of the month.
But here is the important part. WHY do you want money leftover every month? TO INVEST.
When you hear people talking so much about “saving money”, you might think you are supposed to SAVE the extra money. Just put the money aside for use at a later date.
But there are a couple of reasons I have a problem with the concept of “saving” money instead of “investing” money.
Problem 1: It makes people immediately think of bank savings accounts.
You work hard to make money and budget properly so you have money left over. Then you put that money in a bank savings account. Great, right?
Well, I don’t think so.
Bank savings accounts don’t give you a good return. The interest is normally VERY low. And over the long term, you are going to end up losing buying power due to inflation.
And to make matters worse, what does the bank do with your money? They INVEST it. They use YOUR money to make money for the bank.
So, that brings me to my second problem…
Problem 2: People are saying “savings” when they should be saying “investments”.
The point I am trying to make with this website is that it is important to make as much money as possible and budget your money correctly so you have money left over. WHY? So you can invest that money, put it to work, and make more money for YOU.
The reason behind working hard and budgeting correctly is so you can invest your money to make more money. That is how you are going to build wealth. That is how you are going to see your money grow over time to levels that lead to financial security.
Don’t but your money in a bank savings account for low returns so the bank can put your money to work to make more money for the bank. Invest your money so you can make money for yourselves.