I was reading the Money Saving Expert forum the other day and came across this thread from someone claiming that he just can’t save money.
This person who I’ll call “Mr Spendy” for the purpose of this post doesn’t have a lot of debt (apparently his mortgage is due to be paid off next year) and he earns a good salary of £50K per year. He’s 40 and single, just so you can get the complete picture of his financial circumstances!
The problem is that when Mr Spendy gets paid, he doesn’t have much disposable income and what he does have, he spends. He even spends his Nectar points and airmiles as soon as he gets his hands on them. Mr Spendy is a self-confessed spender and he started this thread because he was looking for tips to get started saving money.
This thread interested me, because I used to be a spender. I could not save money for the life of me. When I got paid, I spent it (and then spent more money that I didn’t have on credit cards). Eventually, my spending caused a lot of debt and then I definitely didn’t have any disposable income to help me to save or pay off my debts.
My situation was different from Mr Spendy’s because he doesn’t have much debt to speak of, which of course is all good. And he earns way more than I ever have in a year that’s for sure. But reading this made me realise that no matter how much you earn and how much debt you do or don’t have, you can still embed financial behaviours that you don’t really want. Like frittering away cash on meaningless things.
Reading through the replies and comments to this thread, Mr Spendy received quite a bit of varied advice from forum members. Here are some of the replies that stood out for me!
1. Put your money into a pension
One forum member suggested putting what money Mr Spendy did have leftover into a pension so he couldn’t get his hands on it until he was at least 55. Mr Spendy replied to say that his business already puts a significant chunk into a pension, so no worries there. Hmmm….
2. What are the savings for?
Another couple of members asked the question, “What are you saving for?” and “Do you WANT to save or do you feel you OUGHT to?” After all, if you want to save, there must be a reason, right? Mr Spendy said he doesn’t really have a reason other than a bit of extra security, he feels he really should put some money away. Here lies the problem I think – there doesn’t seem to be any real goal or urgency to persuade Mr Spendy that it’s worth putting some cash away where he can’t touch it.
3. It’s your choice that you don’t save money
Yep – I had to agree with the forum member that suggested Mr Spendy CAN save, he just chooses not to. Mr Spendy is paid well, his mortgage is getting paid off next year and he’s only 40, he has a relatively good pension on the face of things… In his case, perhaps saving money isn’t the absolute necessity that it is for many other people?
4. You’ll end up poor and old with no choices
“Picture yourself in 2 scenarios: first just after retirement, when your monthly income drops dramatically and you’re still active but can’t spend on anything and need to start counting pennies. Then later on, when your health starts failing, picture yourself in a really poor old people’s home, where you have no choices and everything is awful. Does it help to get you starting to save?” – ScarletBea Forum Member
This “tell it like it is” response from another member might not convince Mr Spendy that he should change his financial behaviour, but it definitely made me sit up and take a bit more notice. My first thoughts when reading this thread was that Mr Spendy didn’t really need to save, seeing as his finances seem to be in pretty good shape. He’s obviously not broke… now at least.
But as this member pointed out, things will change after retirement if Mr Spendy doesn’t make plans to change his financial behaviour now. Because how will Mr Spendy carry on spending without his £50K salary? How much will his pension even be worth anyway?
If Mr Spendy doesn’t at least try to CHANGE his spendy ways, then he might just have a big shock later in life. Even with his mortgage paid off, he’ll still have bills. And what about if he gets too old or poorly to manage in his home? Scary stuff!
For me, the main takeaway here isn’t just about the importance of Mr Spendy saving and how much he should be saving, but actually getting some good habits in place so that he won’t fritter away all his money when he just has his pension to live on.
What advice would you have for Mr Spendy?
*Image courtesy of Flickr.
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9 Comments
For a start Mr Spendy obviously wants to to start saving money as he wouldn’t be speaking about it on MSE in the first place. This is a good start as deep down he does really want to be Mr Don’t Spendy.
I can only speak from personal experience but here goes.
For a number of years I was also Mr Spendy and my wife was Mrs Spendy. Money would burn a hole in our pocket and if we had £10 it would be £10 too much.
Eventually we were forced to change our habits as we had accrued so much debt that we almost lost everything. This is how we did it and perhaps Mr Spendy could do it to.
Whenever we went to make a purchase (and we still do this) we would ask ourselves two questions about the item we wanted to part with our cash for.
1. Did we really need this item yesterday.
2. Will we really need this item tomorrow.
I can honestly say that in 95% of cases the answer to both questions were no. Because of this we wouldn’t make the purchase and keep the cash in our pockets.
Although it’s a pretty simple process it works for us and will continue to work for us going forward.
Another thing we do to keep our spending in check (especially with larger purchases) is stick to the rule ‘if you can’t afford to buy two of them now in cash you can’t afford one’. This is a really good one as it means you won’t overstretch yourselves and if you do want to spend some cash, you know you’ll have to save up for a bit longer.
I suppose the main thing for Mr Spendy to do it realise he can’t keep spending like he does and start setting small goals which in turn will give him small wins and the motivation to keep going.
It obviously sounds like his mind is in the right place so with a little push he’ll be a Mr No Spendy in no time at all!
Ricky @ The Skint Dad Blog recently posted…Slow Cooker Bread and Butter Pudding
Thanks for a great comment Ricky and for your advice for Mr Spendy! 🙂 I think the processes you and your wife go through when you’re thinking about spending money are great. Like you, I ask myself similar questions and it does help me to keep spending under control. I always ask myself “Will I still like this purchase in 6 months’ time?” If I think not, this is enough to stop me from spending money.
My advice to him is that he has to make a choice between being a spender and a saver. He should know what results he can get from his choice. He really needs to to decide. Sometimes, we should let people decide for themselves because in this way, they themselves change the way they live drastically.
Jayson @ Monster Piggy Bank recently posted…Don’t Become A Statistic of Generation Rent
Good point Jayson, especially weighing up the results of what Mr Spendy could have if he started to save rather than spend. 🙂
It can be difficult to change your mindset and behaviors from spender to saver, but finding a “why” for saving (or paying off debt in my case) is what really gets you going and keeps you going when it gets tough.
Kayla @ Shoeaholicnomore recently posted…10 Budget Friendly Date Ideas
I think the retirement comment is dead on. I suspect Mr. Spendy has never spent much time in an old folks home. Even the good ones are depressing, and the bad ones are absolute horror shows.
My primary goal for retirement is to have enough for myself and my wife to stay on a nice place once we do working and have as active and enjoyable life as physically possible.
My advice, spend some time visiting different retirement homes and let that inspire you. Positive goals are great inspiration, but negative goals trigger the instinctual response you need for behavior modification.
Jack @ Enwealthen recently posted…Get Paid For Your Opinion In A Focus Group
Well I’d say it doesn’t really sound like he is wanting to change if he has no specific reason to want to save. Until you see any level of motivation, I’m sure he will just carry on in his typical way. 🙁
Tonya@Budget and the Beach recently posted…Why is Change So Hard?
Personally if i was Mr. Spendy I wouldn’t put all my eggs in one retirement basket. The pension may be ok now, but what happens if it isn’t able to pay out as much when he retires? Example would be looking at pensions here in the US. A lot of people’s pensions are being reduced in bankruptcies. We have a government agency that backs them up and guarantees them, but at a reduced amount.
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I agree with the others, he seems to have no major life goals or other reasons he needs to save. I save not only so I can live when I retire, but I also save so I can work less earlier in life, travel more, see the world, have money to spend on what really matters, and more. Perhaps he needs to make some plans to get something really meaningful out of life! It wouldn’t all take money, but surely a trip of a lifetime, living in your own home for your retirement, etc. do take some money.
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