When I was a kid, I was a saver. In fact, I saved almost every penny I was given from the time I was old enough for people to give me money directly versus giving it to my parents for me. By the time I was 16 I had saved enough money to put a $6000 downpayment on my very first car. Even after that, I continued to be a saver, but somewhere, somehow, in between then and graduating from college, the saving instinct waned and the spending instinct took over.
But I think that my saving instinct is beginning to recover, in the path of paying down debt. Even though I’m not saving the majority of the money we bring in, I’m using it to reduce our debt, and carefully counting my pennies and snowflaking them to make bigger and bigger dents in our debtload. But now, as we’re shifting our focus to a combination of saving and debt repayment, I find myself feeling a little nervous. I understand how to pay down debt. I can see debt freedom as my goal and shoot towards it. After 10 months of trying to keep focus on debt repayment and nothing else, it feels rather frightening to take my eyes off that and shift our priorities, even though it is necessary.
For those of us who have learned to pay down debt with single-minded intensity, the challenge now is to be able to shift that intensity from debt repayment to saving money. With debt, there is a finite goal – the elimination of the debt. With savings, the goal may be more nebulous. We want to be prepared for an emergency. We want to be able to retire. We want to be able to have some fun. We want our children to go to college. Whatever your savings goals are, they may feel more abstract and nebulous and not concrete, and that may be the roadblock to becoming an effective saver.
The key to turning savings into a snowflaking target is to define concrete goals you want to meet. Just like debt reduction, saving happens in baby steps. Don’t be afraid to be wrong about the amount you need to save. You can always revise your goals – I’ve revised my debt reduction goals at least a dozen times at this point. The point is to make a goal. Make savings a concrete goal to aim for. Set a goal for how much you will contribute to retirement per year. Maybe it is a percentage of your salary, or maybe it is a exact number. Then make a plan for how to do that.
Or maybe your goal is an adequate emergency fund. Decide on a number to aim for, and then snowflake to that goal just like saving is a debt to yourself. With a firm number in time, the process becomes exactly the same as it was for debt repayment. You can always shift that number upwards in the future – the point it to set yourself a specific goal to shoot for now. 6 months expenses is nebulous – $8000 is concrete. Calculate out a numerical value for your savings goal – and then go for it. Snowflaking works for any concrete goal – the important part is to know what you’re aiming for so you know when you get there.