I don’t “save” money. The concept of saving money is one of those misguided and incomplete lessons many of us received as children. We were told that you must save in order to get what you want. The problem is that we focused on the “what you want” part instead of the mechanism. The more sustainable understanding of this lesson is that you do X and expect Y as a result. It is cause and effect, not “get all your desires met.” That is, money is not simply your way to get what you want. It is a resource to be managed. I manage my money like you would raise a teen. I’m not using my teen, I’m managing to create a productive member of society.
The Teen Analogy
Let us explore your relationship with money. Reflect on the analogy that best fits your relationship. Many think of their money as treasure. They amass it. They put it away and hide it. They only bring it out on special occasions.
A more sustainable analogy is to think of your money as a teenager who resides in your home. You have noticed that the teen needs even more resources for her development. You recognize that it is time for the teen to translate a portion of her labor into income.
We can talk with more depth later about your relationship with your actual teen. Here are some reality switches—some mindset shifts—that will mature your relationship with your money. Put your money to work.
Money is never “free money,” just like teens benefit from structure and a positive direction. Like asking your teen, “What will be your career?” Your money needs to have a purpose in your master plan of sustainability and wealth creation. The budget creates an intentional purpose. It also logs the activities that actually occur. This is monetary purpose: to intentionally apply monetary resources toward a specific goal.
It’s no secret that the tool of purpose with money is a budget. But, just like a teen’s idea for career, the budget is not an idea in stone. It is to be created with available information, tracked over time, and responsive to new expenses an opportunities.
Plan: Defend Your Money
Money seems to desire to be spent, just like teens seem prone to rash decisions. Like asking your teen, “How does this choice benefit you now and in the future?” Your money needs to be accounted for in value short-term and long-term.
The tool of money defense is control of expenses. But, just as teens crave experiences and diversity, your money controls are intentional purchases and funding activities that increase your buying power and capacity. Couponing, price comparison, and alternative activities may be used to defend your money against waste.
Profit: Invest Your Money
When dealing with money, you are always looking for a return on investment (ROI), just like you want your teen to be productive and happy Like asking your teen, “How will this choice pay off for you?” Your money must return tangible capacity and intangible value back to you.
The tool of investment is risk. But, just as teen risk is to stand up for yourself and to be your own person, so your monetary risk is in areas that have proven histories of profitability. I may be further education, real estate, or stocks, but make sure your choice of investment has certain returns.