If there is no money in your wallet, it isn’t because there is a hole there – it is because there is a hole in your mind. Unless there were an exogenous financial setback, then the hole represents your missing discipline to delay immediate gratification. Since your ability to wait or deny yourself is absent, your long-term plans requiring some savings take a permanent back seat to immediate spending and — voila’ – no money in your wallet.
Recently, this came up when I attended a gathering where there were two couples in their early sixties and none of them had a penny to their name. One couple has two very-high income earners with advanced degrees. But they built a spectacular-custom home they cannot afford, borrowed for furnishings, continually borrow for cars, vacations, and even going out to eat. I expect that within 3 years, they will lose everything they have and still owe an insurmountable amount of money. They know that they can never retire and just hope their day of financial reckoning never arrives. The other couple includes a retired nurse and a husband that supervises a construction crew. They routinely spend so much money at a casino that they’ve needed to call a friend to bring a can of gasoline so they could drive their car back home. The wife also supports her mother’s out-of-control spending. Between money being vacuumed up by the mother-in-law and the casino, they have never had an extra penny for saving or investing, let alone maintenance and repairs of what little they do have.
Both couples earn more than the average family, and yet, they have zero in savings. Their lack of savings has nothing to do with:
- The Economy – they can get all the work they want
- Salary – they earn more than average American family
- Children – one couple has no children and the other couple’s children are long out of the home
So structurally, there is nothing preventing them from saving money, it is only psychological. At least 2 of the 4 people admitted great regret and ongoing stress over their current financial situation; plus the financial struggle that they’ll be facing in their future. (Note: 61% of workers are forced to retire before they want to from health issues or being laid off). No matter what your level of income, a similar booby prize awaits anyone that refuses to make savings a priority and maintain that saving habit. Living below your means is not an Olde Timey concept, it is financial reality and those that fail to do this face a predictable and painful future. Whether you are 16 or 56, a portion of any earnings must be set aside into savings and investments for future spending.