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Want To Save More Money?

J. Patrick Collins Jr., CFP®, EA

Many of you are going to read this article and think I’m crazy.  Before you go any further, please know that I am writing this article from advising hundreds of clients over the past several years and my own personal experiences.

With many of the clients and prospective clients we meet with, one of the largest problems we find is the inability to save an adequate amount of money on a regular basis for future goals.  Spending less than you earn is the cornerstone of wealth creation, and unfortunately as a country we are falling woefully short of the mark.  With the savings rate of Americans hovering around zero, many are suffering from Affluenza, a term popularized by a documentary in 1997, which is defined as the “bloated, sluggish and unfulfilled feeling that results from efforts to keep up with the Joneses”.

If Affluenza is the disease, what is the cure?  We know the symptoms are overspending, high consumer debt, lack of savings, anxiety, and feelings of hopelessness.  Rather than trying to solve this problem with band-aids or quick fixes, we must go to the root cause of this human behavior.  Working backwards, we know that;

How we think affects how we feel.

How we feel affects how we act.

Because we are not content (feeling) with what we have the result is often living beyond our means (action).  But discontent is not the origin of Affluenza, it is just the feeling we experience that causes our destructive behavior.  Our thoughts and views on money, possessions and self-worth are the underlying motivation which affects our feelings and ultimately our actions.

We have the ability to change the way we think about ourselves and the world around us, which will in turn affect our feelings and actions.  Affluenza, at its core, is a form of selfishness, focusing inward on our desires, our wants, and our dreams.  To combat this problem, and turn our trend from spending to saving, something drastic must be done:  give away more money to those in need.

You may be asking yourself, “How can giving away more of my money, help me save more?”  The answer; it will change your way of thinking, which will have a compounding effect.  Think about what you do before you spend money.  Let’s

take buying a new car for example.  You probably spend time reading consumer reports, going to the dealership and talking to salesmen, looking in the newspaper for the best deal.  Once you buy the car, if you see there is a recall notice or an article in the paper about

your particular model, you’ll probably read it.  Why?  These are all things that could essentially affect YOU.

The same effect happens when you give money to charity.  For example, if you start giving your money on a regular basis to an organization like Habitat for Humanity, you are going to naturally be more interested in this area, reading articles you would have once glazed over about poverty, and being touched by human interest stories.  Basically, your focus, over time, will shift to OTHERS.  Remember, how we think affects how we feel, and how we feel affects how we act.  If we are thinking about others first, our feelings of discontentment will turn to empathy and caring.  If we feel empathetic, we are not going to be as concerned about keeping up with the Joneses.  Even though we are giving more money away, we are not spending as much on the latest and greatest gadgets, freeing up more resources for saving.

I’m the first to admit, this may be a stretch for some of you to understand or believe.  As I mentioned in the beginning of the article, I have had the privilege to counsel hundreds of people over the past several years, and every client I have met that has made giving a priority in their lives, has no problems saving for the future.  While many think that higher income precedes saving and giving, I have found with clients and in my own life, that when giving is placed first, everything else seems to fall into place.

The information in this article is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, and does not purport to be complete and is not intended as the primary basis for financial planning or investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.