Thursday, February 14, 2013

How To Save Money Without Penny-Pinching: The Purpose Driven Approach

How To Save Money Without Penny-Pinching: The Purpose Driven Approach:
penny pincher How To Save Money Without Penny Pinching: The Purpose Driven ApproachThis is a guest post by David Lewis.


You hear it all the time: saving money requires making sacrifices.
You’re told things like:
  • Stop going to Starbucks
  • Cancel your gym membership
  • Turn down the heat
  • Ditch your cable T.V.
  • Stop using so much electricity
  • Use coupons at the grocery store
  • Buy generic brands
  • Eat Ramen noodles
  • Walk or bike instead of driving
  • Don’t go out on Friday nights
Do not pass go. Do not collect $200. Okay, collect $200, but put it in the bank and don’t touch it.
What happens if you somehow manage to consistently do this? You become “one of them.” A penny-pincher — a person more concerned with deprivation than pursuing your values.
You look for ways to save a buck just for the sake of saving a buck. You might even start alienating friends and family members as a result.
It’s not a healthy state of mind. Fortunately, it doesn’t have to be this way.

A Better Approach to Saving Money

Here’s what most people miss: It’s not about giving up things. It’s about pursuing only the essential values in your life to the exclusion of everything else.
How do you do that?
The key to pulling this off is to define your life’s purpose and then commit to living it every single day. It has to be something that you have an undying passion for.
This purpose-driven approach is a little different than setting financial goals, which is where most people start when they’re trying to save money.
A purpose is like your destination point on a road trip, the climax of your life. Goals are like the map showing you multiple roads leading to your destination. If you don’t create a purpose (a destination) before defining savings goals, what you usually end up with are contradictory values.
This, in turn, is what creates the penny-pinching mentality. It’s the idea that “I must save money for certain things, but I can’t do it without making sacrifices.” Yuck!

How to Get Started With Purpose-Driven Savings

Defining a purpose isn’t new in the business world. In fact, every successful business does this – except they call it a “mission statement.” This statement is a statement of doing rather than a statement of being. That’s important.
So, if you were to apply this to your life, you wouldn’t say “my purpose is to be happy.” That isn’t really a good, clear purpose. It doesn’t say what you’ll do to become happy. Happiness is a great thing to achieve in life, but you need to do something to achieve that happiness. It’s not going to just fall in your lap.
A better way to define your purpose would be to say “my purpose is to teach history,” “…design bridges,” “…play the piano,” “…bake extraordinary desserts,” or something like that because you know these things will make you happy.
You’ll notice that all of these statements are action statements that readily apply to a vocation of some sort, sometimes several. Teaching history is usually going to lead to becoming a history teacher, but you could also be a historian. Designing bridges probably means you’ll be an engineer.
In every case, your purpose determines your lifestyle which, in turn, drives your savings and spending habits.
For example, an artist might only have enough time to pursue 5 or 6 major values – like painting, going on vacation to “re-energize,” visiting with friends and family, visiting museums for inspiration, reading fiction novels, and saving up for retirement. Along the way he may pursue smaller values (or goals) like buying a car, a personal computer, art supplies, or even a studio.
If he thinks carefully about all of them, and how to achieve them (through precise and thoughtful budgeting), his goals can all drive him towards his purpose in life without creating unnecessary conflict. This is how a purpose helps you save without making any sacrifices.

Your Purpose Keeps You From Feeling Pinched

This is going to take some serious thought but, once you get this down, it makes saving money ridiculously simple. You won’t have to struggle over “living for today” vs. “saving for the future.” From work-related goals to recreational activities, the penny-pinching mentality will become a non-issue.
What about you? How would you describe your purpose-driven savings plan?

About the Author

David Lewis is the owner and founder of Twin Tier Financial and a member of the International Association of Registered Financial Consultants. Have questions about this article? Connect with David in the comments below or on Twitter @dcl1979.

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