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What Counts As Saving

May 21st, 2007 at 05:29 am

Really more of a philosophical musing than anything else, but feel free to respond!

I ask because I don't feel I'm saving enough. Then again, do you ever feel that you are?

On the surface it looks like my household ain't doin' that bad. I send almost 20% of our net off to the online bank every month. Sounds good, yes?

However, some of that I don't REALLY consider savings. How so? Well, that lump includes the monthly contribution I make to my irregular bills, like water, property taxes, and homeowner's insurance. Granted, I save the money up for a year (or quarter, in the case of water) and then spend it, so I guess it would qualify as short-term savings. But it doesn't 'feel' like savings, it feels like a bill. Probably because it is.

I feel somewhat stuck between a rock and a hard spot, as the saying goes. See, DH responds well when he wants to spend relatively big cash and I tell him that the money in the bank is allotted to X, Y, or Z. For instance, he understands that the homeowner's insurance and property taxes have to be paid no matter what because if we don't we loose our house, so that money is easy to see as sacred. But when money is sitting there without a purpose other than "in case we need it", he seems to see it as fair game.

So, perhaps I just need to mull over and find some more categories that are easy to see as sacred Big Grin

For those that are wondering, here are the categories that account has so far:

Property Taxes: house
Property Taxes: car
Homeowner's Insurance
Water Bill
Tina's Retirement (no 401k, so saving $ until I can open a Roth)
Christmas Fund
Gift Fund
Medical Fund
Car Maintenance Fund
Vacation Fund
Misc. Household Fund

11 Responses to “What Counts As Saving”

  1. monkeymama Says:

    The only thing I really consider savings myself is the efund, and even moreso, retirement. Though obviously retirement is a different animal.

    The reason I feel this way is we had considerable cash savings when we were younger, but we ended shifting a lot to retirement, some to pay bills while we weren't working, and the rest for cars. I don't know why it took me so long but I realized this isn't all savings because it gets spent - LOL.

    But I have a short-term savings for insurance and property taxes, and a slush fund for smaller unexpected expenses. I don't consider those savings in the least as they will all be spent within the year. Much as you probably wouldn't consider escrow/impound payments a savings.

    The efund is more gray as we want the bare minimum to be 3 months living expenses, and we are starting to add about $5k/year for our next car purchases and home maintenance. I like my money to be flexible so we don't separate it out. IT means we should have a good $20k easy each in 10 years to buy new cars, but if we want to go buy a $10k car and need the money for an emergency, or decide we rather go on a big vacation, it's there. As long as there is a basic car fund and 3 months expenses in there. If we have a huge house repair our next car will be more modest, etc. So I consider this fund "savings" but the fact is the money won't stay there forever. I only consider our retirement our real and true savings since it is pretty untouchable.

    When things improve, we are going to save money outside retirement (mostly when locked out by retirement limits). I would still consider it retirement, or using it eventually to pay off the mortgage - but overall that would definitely be savings as I would not intend to spend until retirement. I just remembered that as well.

    Definitely a good question.

  2. tinapbeana Says:

    I'm kind of the same, but only more extreme I guess, because I think of it all as getting spent at some point. Whether it's in the next year for taxes or 40 years down the road when I retire, the only difference is the timeframe.

    With that type of mindset, I really should see almost everything as saving, as in I'm saving money I have now for things I'll want or need at some point in the future. Some of them I can forsee (i.e. taxes, another car) some of them I can't (i.e. the actual emergency), but the intent is the same.

    The funny thing is I have no problems treating the really long-term savings (retirement) and the really short-term savings (taxes, etc) the same: don't touch the money! The long-term stuff needs time to grow and work for me, and the short-term stuff will be needed so soon that I can't make up for it if I spend it. It's the middle-term money that seems to be causing problems.

  3. Ima saver Says:

    I have the same problem.

  4. scfr Says:

    What we consider real savings: Retirement and Major Purchases (House, Car, Furniture). If we had children, I'm sure College would also be considered savings. Everything else, we just consider "budgeting."

    Many many years ago, when we started budgeting, my husband couldn't see the sense of carrying such a large balance in the "pet fund," but he saw the light when our late cat needed cancer surgery and those funds disappeared in a week.

    I think it takes a couple of times when you really need that mid-term money for it to become clear why you have it.

    Our "funds" are actually just columns in a ledger, as our money is kept together but is earmarked for specific purposes. [This works for us, but I understand why the envelope system or separate accounts works better for others.]

    About once a year, we look at our balances and we sometimes move funds around.

    We don't have a specific "Emergency Fund" category because between all of the other categories plus the money that's for my husband's business, we have enough to live on for over a year if necessary. If it weren't for the business (and the cash flow needed), I'm sure we'd have a separate EF, which we would probably call the "Unexpected Unemployment" Fund!

    BTW, do you have "Home Repair" funds and "Replacement" (Car, Furniture, Etc) categories?

  5. PrincessPerky Says:

    If it is 'saved for a bill' it is 'escrowed' you can't touch. If it is 'saved for emergency' find stats on how many medical emergencies wipe out families each year.....either he will eat healthier or will be willing to leave an EF alone.

    Either way you will prolly have to settle for a happy medium, between what you would like to squirrel away, and what he would like to spend.

    playing verbal semantics might get the EF higher, but it wont change what you are doing prolly...savings is a tricky word IMO.

    Tighten the purse strings too far and a spender will spend more in defiance....loosen them too much and a spender wont ever bother to think first....a lose lose situation if I ever saw one.

  6. Aleta Says:

    I agree with Tina. Eventually all of your savings will be spent even in retirement. It's only a matter of time. I also struggled with savings and what was considered savings. If it is a an account that is irregular and will be paid out during 1 years time, I call it an escrow account and allocate money each month to fund it. I'm sure that's why financial planners ask you about short, middle and long term goals. Each one comes at a different time but they are goals. I would definitely consider saving for a car a mid-term goal because it may take you at least 5 years to save for it. If you can call your bank account an escrowed account your husband may see if differently.

  7. LivingAlmostLarge Says:

    It's not savings if you are spending it this year. So car insurance, property taxes, etc. Sorry but it's not savings you're just holding the money till it's due. I have to explain to my DH why I have $5k in the savings account at any time, ummm...property taxes are high and due every 3 months! So I need a large cash cushion for stuff like that. It's not savings it's just a holding account. arrgh.

  8. nance Says:

    I put the money for property taxes and homeowner's insurance in my savings account, but don't consider it
    "savings". I keep a running total of how much of it is for tax & ins. and deduct that from "real" savings. It may be in the same account, but the amount "escrowed" for a bill that is coming up, is kept separate in my mind, if not in actuality.

  9. shiela Says:

    I'm the same I don't consider money I put away for bills as savings, especially if they are within the next 12 months. They are expenses to me and I have "Funds" for them. I guess, savings to me is the money left over once I've taken all those expenses out. Then I have different types of savings, such as "mini-saving" and saving for investments. Saving for investment to me is the ultimate saving, which hopefully create wealth/growth.

  10. LuckyRobin Says:

    You said: But when money is sitting there without a purpose other than "in case we need it", he seems to see it as fair game.
    So don't let him see it sitting there. Put it in an account he doesn't see. You've said before he has a substantial monthly allowance, which I personally consider an enormous allowance. He doesn't need to "see" money set aside for other things. Since its your income generating the savings, if I recall properly, I see no reason why you can't keep it separate from the accounts he can access.

  11. tinapbeana Says:

    Well, all the money is kept in either my checking or my online savings account. The only joint account we have is his checking account, where his allowance is.

    With that said, we do have relatively regular financial check-ups where he sees the growing balances in all the accounts. Seeing the savings he understands build up helps keep him motivated. Thisi s a double edged sword, of course, because it means that he sees the 'other' money sitting there too.

    And yes, it is my salary that has us in our current rosy financial position. Other than our allowances, the money is all treated as house money, not mine or his. I'm debating about adjusting my allowance to be a percentage of my salary that closely mirrors his. I don't want to, though, because that means I'll have this wash of "disposable" personal money, and I'll just wind up saving for the household out of it (i.e. EF, pay down debt, etc). Then again, if that's the way I want to spend my personal money then I suppose so be it, right?

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