Spending & Saving


While it may be difficult to start, saving is a major key to being financially stable. Having money set aside empowers you to live more comfortably, knowing that you have what you need if something were to happen. Let’s look into saving a bit more.

Saving Strategies

Saving money isn’t just taking part of your income and putting it into a savings account. Every day, you face many opportunities to save! For every purchase you make, there is a saving opportunity. This could be eating at home instead of at a restaurant, buying a used watch instead of a new one, or even not making the purchase at all!

There are tons of strategies for spending less on purchases out there. It’s worth a Google search. Some strategies are: buying used products instead of new ones, using promotions and coupons, comparing prices in different sites or stores, and buying discounted gift cards.

Comparison shopping is essential to making the most out of your money. It involves comparing the prices of the same or similar product across different sites or stores before actually going out to buy it. This way you can make sure you’re getting the most bang for your buck.

One of the oldest rules in the book is to "Pay Yourself First." This means that before you pay your bills, groceries, or anything else, set aside a part of your income to save. This habit, if developed early, can help you build tremendous wealth.

The key to "Pay Yourself First" is that you’re making saving your priority. Many people save what’s left over at the end of the month, but this approach might leave you with no money to save at all! Save first, then pay your bills, and finally you can make a plan to spend the rest. There are many advantages to doing this!

Saving Advantages

If you aren’t working to save towards something specific, you’re more likely to spend more than you should. You might not have enough money for unexpected bills, and you might not even have enough money to retire (stop working).

When setting financial goals, you are probably thinking about when you would like to achieve these goals. If you’re saving up for a new TV, this is a short-term goal; if you’re saving up for a new car, this is probably a mid-term goal; and if you’re saving for retirement, this is a long-term goal.

The main advantage of saving money is that you’ll be prepared when you need to spend it. If your car breaks down and you can’t get to work, you are prepared and have the money to fix it in time. Also, you will be able to make big purchases without needing loans (which raise the cost of the purchase because of interest).

Saving money means you aren’t spending it. Being too frugal is a real possibility. If you’re skipping medical or auto appointments because you want to save that money, you’re being too frugal. If you don’t take care of problems as they arise, they may grow and cost much more in the long-run.

It is possible to save too much. If you’re missing out on experiences, like traveling, just because you’re saving all the time, you might turn out to be the weird 90-year-old who never left her house and lived a poor life and turned out to have millions in her account! To avoid this, try setting goals for yourself.


Some people are lucky enough to find saving more enjoyable than spending. Unfortunately, that’s not the case for most of us. Those who love spending have a harder time finding reasons to save, which could lead to financial ruin. To avoid this, set an achievable saving goal that you will find satisfying to complete.

Financially successful people deal with saving in a very practical way. They tend to be more responsible with the money they spend. They establish and follow budgets, focus on the long-term, make saving a priority, get rid of debt, control impulse spending, invest in their future, live within their means, and set goals.

If you’re looking for "Habits of Financially Successful People," look no further. We recommend you try to follow some (if not all!): respect the value of money, don’t compare yourself to others, think through decisions, set goals, be patient, never get discouraged, don’t procrastinate, and learn from past mistakes. Sometimes, the only thing keeping you from success is in your head!

Spending is the opposite of saving. Therefore, all spending must have a good reason behind it. It’s important to always keep your goals in mind when making any financial decision!

Congrats, you just saved $1,500 for a new flat-screen TV! So, what’s next? Well, you can now buy your new TV guilt-free, knowing that you deserve it. And after that? Set a new goal and hype yourself up for it. Your work isn’t done just yet!

When saving, it’s important to know and prioritize your needs.

Ruedi’s Hierarchy of Financial Needs

Ruedi’s Hierarchy of Financial Needs is a graphic that breaks down the fiscal needs of an individual. Lower, broader levels help build up one’s financial security and set people up for success, so that they can access the financial independence at the top of the pyramid.

There are five distinct levels in Ruedi’s Hierarchy. From the bottom to the top, they are:

1) building an emergency fund,

2) acquiring insurance,

3) paying off high interest rate debt,

4) setting up proper savings and investments, and

5) reaching financial self-actualization.

As you go up, each level becomes less essential for meeting bare necessities.

Let’s take a look at how the hierarchy plays in for our friend Zoe! When Zoe starts her own family, it will be *crucial* that she sets up an emergency fund to protect her family in case she loses her income stream. Next, to protect the money she has saved and the value of her existing assets, she must buy good insurance to protect against unplanned financial losses.

Now that Zoe has set up a backup stash and ensured her assets, it is important to get rid of any bad habits and any debt that is eating away at her savings. Most importantly, this means paying off the credit card debt that compounds and grows at a fast interest rate. A good credit score will make her life a *lot* easier!!

Finally, after clearing the debt list, Zoe can look for ways to turn her money into more money by saving and investing. These good habits will allow her to consolidate wealth and reach her goals for financial self-actualization in the future! Now Zoe is in a secure state and can afford to spend on what makes her happy. Zoe has climbed the pyramid, and she’s waiting for you!

Finally, let’s delve further into the first and most important element of Ruedi’s Hierarchy.


An Emergency Fund is money set aside for use in case of an emergency. It provides you with a safety net in the event of a sudden, but necessary, future expense.

An Emergency Fund should only be used in the case of a personal financial crisis, such as the loss of a job, an illness, car issues, or a major home repair.

An Emergency Fund should not be used for planned expenses, such as a house or a new car. It also should not be used for unnecessary or non-urgent purchases such as the latest iPhone. If you can wait until you’ve saved enough money to make the purchase, an Emergency Fund should not be used.

It is important to set up an Emergency Fund before putting your savings in a long-term investment. When making long-term investments, it’s harder and more expensive to withdraw your money. In the case of an emergency, you may need quick access to cash, which would be available from your Emergency Fund that you keep in a separate, easily accessible account.

The rule of thumb for Emergency Funds is that they should contain enough money to cover a person’s income for at least 3 months. A good strategy to start saving is to set aside a comfortable percentage of your monthly income that contributes to your Emergency Fund.

Key takeaways

When you develop the habit of saving your money, you’re better equipped to face the unpredictability of life, as well as to treat yourself to those major purchases down the line. Go ahead and start climbing the pyramid; Zoe’s waiting for you!