A thought on “Saving”

If I had a dollar for every time I’ve heard someone say they’d like to save more money, I’d be a rich man. In all my years of teaching, I have never met anyone who wouldn’t like to have more money tucked away in savings.  So why don’t we save?  My students tell me it’s because they can’t save.  They don’t have enough money to save.  There’s never any money left over to save after they have paid all of their bills.  When encouraged to examine these responses more closely however, nearly everyone recognizes that he or she has saved for something at some point in his or her life, and, no matter what his or her income level, has at least one penny left over at the end each week that he or she could potentially be saving.  So, if it’s not that we can’t or we don’t have enough, then why don’t we save?

One of the barriers that often prevents people from saving has to do with a pervasive belief that saving is only worth doing if the amount being saved is a large number.  All humans, whether they are aware of it or not, have in their heads a dollar amount below which money holds no value for them.   A penny, a nickel, a dime, a quarter, even a dollar, although it could be saved isn’t hardly worth it in most people’s minds.  This is especially true of people who feel they must save a lot of money in a relatively short period of time.  Consider retirement, for example.  People who feel inclined to save for retirement typically believe they need to save a large amount of money in a relatively short period of time.  Even as much as a dollar per week in savings, in this particular example, seems to most people insignificant and hardly worth it.  So instead of saving a dollar per week, what do they do? They save nothing, because they don’t see the value in it.

When you are able to see that saving is more about implementing a behavior than it is about any particular dollar amount saved, you can perhaps begin to see value in doing it.  So pick an amount that you believe you can comfortably save over the next day, week, month, or whatever.  A penny, a dollar, ten dollars, twenty-five dollars, it doesn’t matter.  Pick an amount.  Start small.  Work it into your budget as a line item.  Start saving.  Start now.  And keep going.

 

Time Value of Expenses

How much time and energy, in terms of work hours, does it take you to pay for housing, transportation, food, health insurance, car insurance, or entertainment?  Do you know?  If you are like most people, you may have thought about this as it applies to some of your expenses.  Or not. In either case, I have found that when people begin to apply the following exercise to their expenses, they tend to see how or if their expenses are really in alignment with their values in an even deeper way than when they did the receipt exercise.

Here’s an example of how it works.  The other night I took my oldest son out to dinner and to see a movie.  We went to a nice little restaurant.  Not too expensive, but definitely not the “value meal” at the local fast food joint.  The total cost of the meal with tip was around $45.  Movie tickets for the two of us cost $24.  The “Value Package” snack we bought at the theater cost $15.  Total cost for the evening totaled $84.  Now if I’m making $10 per hour and the night out cost $84, then the time cost, in terms of work hours, for the evening out with my son was 8.4 hours.  Well, I know that I work approximately 8 hours each day and so the cost of the evening out was slightly over one of my work days.

In addition to being a good chunk of change, that’s a lot of time and energy. When we pay for rent, mortgage, dinner out, movies, or anything else for that matter, not only does money leave our possession, but so does the time and energy that money represents.  Whenever we spend money, we also spend our time and energy.  And like money, once that time and energy is spent, it cannot be used for anything else.

Of course, using the same example above, we could break out each expense separately as well.  The meal was $45.  If I divide that by $10 per hour I would see that the meal cost me 4.5 hours of work.  The movie was $24, divided by $10 per hour and I would see that the movie cost me 2.4 hours of work.

To calculate the time value of a particular expense, you take the amount of the expense and divide it by the hourly wage you listed above and you can figure out how many hours it takes to earn that expense.

Now, let’s take a different expense.  Say for example your food costs $250 per month and your hourly wage is $10/hour.  Divide $250 by $10 and you will see that it costs 25 hours of work time.  Of course, I’m using simple round numbers to demonstrate and your numbers might not be so simple and round.  No problem.  You can either do the exercise with your exact numbers using decimal points and all, or you can round up or down.  I’m not looking for perfect calculations – this is not a math class!  I just want you to get a better idea of how much of your work time is devoted to your expenses.

How Much Are We Really Spending

People typically think of rent or mortgages as monthly expenses since, after all, we pay those expenses on a monthly basis.  In actuality though, we are paying for every hour, every minute, every second, EVERY MOMENT, of every day. For example, if a typical month has 31 days and there are 24 hours in each day, then the number of hours in a typical month equals 744.  If my rent costs $1,000 per month, I accrue approximately $1.34 in rent per hour and approximately $32.26 per day.

Calculating rent, or mortgage, utilities, credit card bills, grocery bills, etc. down into an hourly or daily amount might not sound like a lot of fun, and my goal here is not to turn you into a human calculator or to persuade you to spend an exorbitant amount of time calculating every single one of your expenses in this way.  I simply want to raise awareness about how much money is really flowing out of your possession, so often without your awareness or knowledge, at any given hour or on any given day.

Stress Part 4 – Perceptions

If you have a child, you’ve probably had this conversation:

Child – “BUT I NEEEED IT!!”

You – “You don’t need it.  You just want it.”

Child – (While lying on the floor screaming and in tears) III NNNEEEDDD IIITTT!  I need it!  I need it!  I need it!  NOW!

Ah, the joys of parenthood.  If you don’t have children, please feel free to laugh out loud.  And if you’re planning on having them, then your day is coming!

I need a haircut.  I need to get an oil change.  I need to get my nails done.  I need a drink.  I need a vacation.  I need a new car.  The list could go on and on.  Are these really, as we say, needs?  Or are they wants? If I were to tell you there’s a big difference, you would probably be offended.  Of course you know that, but the fact is that people tend to use these two very different economic terms interchangeably as if they have similar, or even identical meanings.  So what is the difference?  When I ask my students this question, they almost always say that a need is something you can’t survive without.  A need can either be physical and objective, like food, water, clothing, and shelter or psychological and subjective, like security, autonomy, and self-esteem.  A want, on the other hand, is something you desire, but could go without if you had to.  A need is survival based.  A want is not.

Take a moment to jot down five things that you need, and five things that you want.  Easy, right?  Seems like it should be, but people frequently have difficulty with this little exercise.  We’ve usually heard a lot throughout our lives about the concept of want versus need, but rarely have we ever taken the time to sit down and really think about it from a personal standpoint.

Want	Need
1.	1.
2.	2.
3.	3.
4.	4.
5.	5.

Now imagine that you make your living as a hair model and have an upcoming audition for a new Clairol commercial.  You haven’t had a job in some time and landing this gig is absolutely necessary if you are going to maintain your current lifestyle while continuing to pay all of your bills on time.  The audition is in two days and on your way to the salon to get your hair cut and colored, your car breaks down. Without your car you can’t get your hair done.  You need to get your hair done if there’s any chance you’re going to land that audition.  You need your car.  So after you call the salon to reschedule your hair appointment for the next day, you call up your insurance company, get the car towed to the nearest mechanic, and pray that whatever it is can be fixed quickly.  After giving the car a once over, the mechanic informs you that it’s going to take three days to fix the car.  You need to be at that audition.  You need your car sooner than three days.

Using the distinction outlined above, is the word need used accurately in this scenario or should we have used want here instead?  Let’s take a look at what’s being threatened.  Security?  Autonomy?  Self-esteem?  All three seem like likely possibilities.  Are security, autonomy, and self-esteem things that we can survive without?  For most of us, the answer is no.  Not for any length of time anyway.  So if security, autonomy, and self-esteem are necessary for survival and are in fact being threatened by the loss of access to your car, then based on the distinction outlined above, the use of the word need in this scenario is correct.  What if, however, you were able to avoid the threat to security, autonomy, and self-esteem by renting a car, taking the bus, or getting help from a family member or friend?  In that case, the loss of access to your car becomes an inconvenience as opposed to a threat to survival, and use of the word want is more accurate.

 

Earlier, we discussed the role of perception in the initiation of the fight or flight response during episodes of acute or chronic stress.  We determined that a threat to survival, whether actual or perceived, was necessary for the initiation of the fight or flight response and concluded that one way to reduce the harmful psychological and physiological effects of stress and the fight or flight response might be to focus on changing our perceptions of situations that are not truly life threatening.  So how is that related to our current discussion on wants versus needs?

 

If needs are things that we can’t survive without, then any time a threat to one’s needs is present, whether physical or psychological, actual or perceived, the result will be acute or chronic stress.  Any time we convince ourselves that we need something, whether we actually need it or not, we place ourselves at greater risk for suffering higher levels of stress in the event that something threatens our ability to meet that need.  When you consider how often people use the terms need and want interchangeably, as if they have similar, or even identical meanings, this initially seemingly small and insignificant human tendency, now has some pretty serious implications.  Might it behoove us all to pay a bit more attention to the stress we may be inadvertently adding to our lives by thoughtlessly mis-classifying our wants as needs?

 

 

 

External Barriers to Change – Stress Part 1

Since 2007, the American Psychological Association has commissioned the annual nationwide Stress in America™ survey to examine the state of stress across the country and draw attention to its potentially serious physical and emotional consequences.  This handy little survey measures attitudes and perceptions of stress and identifies prominent sources of stress, behaviors commonly used to manage stress, and the impact that stress has on our lives.

Year after year, participants’ responses have revealed high stress levels, reliance on unhealthy behaviors to manage stress and alarming physical health consequences of stress.  Key findings indicate that nearly three-quarters of Americans say they experience stress at levels that exceed what they define as healthy. Money, work, the economy, and personal and family health are the most frequently cited causes of stress.  Although, overall, people seem to recognize that stress can have an impact on health and well-being, citing irritability or anger, fatigue, lack of interest, motivation or energy, headaches, upset stomachs, and changes in appetite and sex drive as commonly experienced psychological and physiological responses to stress, they do not necessarily take action to prevent stress or manage it well.  Sizeable proportions of adults of all ages report using maladaptive coping behaviors such as, overeating or eating unhealthy foods, skipping meals, smoking, drinking and sedentary activities such as watching television or listening to music, to alleviate stress in the short-term rather than taking the necessary steps to decrease stress and improve health in the long run. Lack of willpower and time constraints are the most commonly cited impediments to healthy and sustainable lifestyle or behavior change.  Since research shows that stress and the unhealthy behaviors people use to manage it are key drivers and proven precursors of many chronic illnesses and conditions, including high blood pressure, heart disease, stroke, type 2 diabetes, certain types of cancer, arthritis, depression, anxiety, and substance abuse, people who cope with stress in unhealthy ways are likely to end up creating significant personal health problems and more stress in the long run.  Overall, Americans appear to be caught in a vicious cycle where they experience high levels of stress and because they are unable to take the steps necessary to alleviate stress and improve health long-term, engage in maladaptive coping behaviors to alleviate it in the moment, thereby creating serious health problems and even more stress.

Are you dizzy yet?

I’m beginning to wonder if stress is just a part of the American identity.  We, as a society, do not appear to value stress reduction.  We seem to value the opposite, admiring and rewarding the person who not only multitasks doing two or three things at once, but five. Exceedingly stressed and excessively busy lifestyles, it seems, have become a necessary component to achieving the American dream and until we learn to value a more balanced and serene life, stress could easily become our next public health crisis.

Google “stress management” and you will get a million and one hits identifying a multitude of strategies for managing stress.  Exercise.  Get more sleep.  Breathe.  Meditate.  Take a vacation.  Relax.  Sound familiar?  None of these strategies that people try when they are already feeling stressed out are new to us, and if you are able to integrate any of them into your life, I highly recommend it.  But what about strategies for reducing the amount of stress we allow in and take on in the first place?  Surely there is a way to stop some of it before it ever happens, right?  I think so.

The next post will begin discussing some things we might do to take on some of our own stressors. In the meantime, can you identify what are some of the recurring stressors in your life?  Can you then identify any unhealthy behaviors that you use to help you alleviate your stress?