Have you ever forgotten about money? Not like you’ve left it under a pillow or lost it in couch cushions, but forgotten that you’d put it in savings or an investment account. That is the best thing to do, and why the suggestion is to take savings off the top of your earnings and not the bottom.
That has and has not happened to me this week. In one area I am trying to build an economic moat and in another I am trying to build a self sustaining system. They are both working, but one is being built while the other is being grown.
Savings are a tricky thing. There is a psychological factor to them where money saved becomes money spent. The out of sight out of mind philosophy. That works great with standard savings accounts. I want to have a brief aside here to talk about banks and how people view them. Banks aren’t offering a service. They aren’t a place to store your money. A bank is a vender, a reseller. They are buying your money and then selling it to someone else, and right now they are paying less than pennies on the dollar for your money. If more people honestly viewed banks for what they are our savings would be getting better interest rates.
Now that that aside is over let’s get back to the psychological edge of a savings account, even if it is paying 0.0001% interest. That factor is that people spend the money in their pocket. It is how people operate and why it is important to keep saved money separate from spending money. That is the factor that makes it work.
The edge in savings isn’t that you can’t spend the money it is that it requires a longer thinking process before it is spent. It is equal to the effort of cracking open a piggy bank. It is that extra step that creates the thinking. It turns impulse into decision, and when it is seen in action, even in yourself, it is a wonderful thing.
David Huzzard Writes 