Published June 28, 2012
I used to have a savings problem. But not in the way that one might think.
For years, when payday would come, I would budget a ridiculously large percentage of my paycheck for savings. I left myself very little for bills and practically nothing for shopping, eating, entertainment - the things I vaguely dubbed “nonessentials.” I was determined not to live beyond this budget.
Well, I sorely underestimated my love of “nonessentials.” And it cost me, because I would inevitably overspend, even as little as $10. Which doesn't sound so bad, except that, after saving all of my money, I had nothing left in my checking account and would thus incur overdraft fees. At one point, a $2 purchase spiraled into $300 dollars of overdraft fees.
My reasoning was this. My savings account was with a different bank that offered a higher interest rate. Yes, it occurred to me that the $2 in interest was ruled out by my $35 overdraft fee. But I kept convincing myself that the fee was only that month. I wouldn't let it happen again. But of course, it did happen again. And again. It wasn't just overdraft fees. There were other financial decisions I made - in the spirit of saving money - that ultimately cost me.
I was so obsessed with saving, I was making unreasonable goals and ultimately setting myself up for failure. I desperately wanted to see all of my money in one place. Having $1,500 in checking and $5,000 in savings wasn't enough. I wanted the instant gratification of seeing $6,500. I would leave myself nothing just so I could see that number. Like I said, it was an obsession. I admit: I also wanted to get rich slowly as quickly as possible.
Here's the history of my savings problem. I love to shop. Always have. While I've learned to curb it, it's a struggle. My solution was to replace shopping with another activity that gave me a sense of self-worth. That activity was saving money. I figured using the antidote would solve the problem, but I was merely putting a band-aid on it. I had to learn the first tenet of the Get Rich Slowly philosophy: Money is more about mind than it is about math.
Recently, I talked to my mom about this. She mentioned that my father had been on a money-saving kick, putting nearly everything into his savings, much like I'd been doing. My father had become increasingly depressed, and having never suffered from depression, he had no idea why. Eventually, it came to him. He had zero in his checking account, intentionally. He was scrambling to outrun overdraft fees and also make sure he had just enough to pay the bills. Maintaining a zero balance is not just stressful, it's bleak. My mom, in her infinite simplistic wisdom, asked: If your money is costing you peace of mind, why are you saving it?
Simply put, saving money is great. But like any obsession, it can sometimes end up costing you. Here are a few specific lessons I learned from my money-saving sprees.
I'm not suggesting living beyond your means or giving in to overindulgence. But it's also important not to go to the other extreme and save beyond your means. The lesson I learned: it's nice to have the instant gratification of seeing a big number in your savings account, but slow and steady always wins the race.
The original article can be found at GetRichSlowly.org:
How Saving Money Cost Me Money