Want to save? Give up the big things

Marketplace Staff Jul 25, 2006

KAI RYSSDAL: Never mind those growing gas prices and creeping interest rates. Consumer confidence is up a few ticks all the same. That’s according to the Conference Board as of this morning. The business research group says how we’re feeling about things economy-wise is holding steady. Why? Don’t know. Maybe people think if they just cut out the little things their finances can handle anything. Consultant and commentator Amelia Tyagi says it doesn’t really work that way.


AMELIA TYAGI: Clip those coupons. Shift to that cheap, scratchy toilet paper. And whatever you do, don’t buy any more lattes at Starbucks.

You’ve heard it before. Some famous financial advisor, shaking his finger and telling you how all you have to do is save $5 a week and all your financial problems will disappear. Before you know it, you will be debt free, investment rich, and lighting cigars with Donald Trump.

Yeah, right. The bottom line is, the little stuff really doesn’t add up. Unless you live to be 500 years old, saving five bucks a week is not going to pay for a retirement home in Tahiti.

The real advice is that the big things add up. The fact is, one-third of Americans live in a house they can’t really afford. Even more of us drive a car we can’t afford. Fifty percent of us aren’t saving a single dollar for retirement, let alone the 10% of our salaries that most experts recommend. So clipping a few coupons isn’t going to build that nest egg.

If cutting the lattes isn’t going to fund a comfy retirement, why do we hear that old advice so much? Because it is easy. It is easier to pack a brown bag lunch than to sell your car. It is easier to give your husband a haircut at home than to move to a smaller apartment. And it is easier to boil your own beans than to sell your house.

But of course, just because it’s easy, doesn’t mean it’s right.

So the next time some expert shakes a finger at you for enjoying a lunch at an upscale restaurant, go ahead and roll your eyes.

Just try not to roll your eyes when it’s time to make the real money decisions.

RYSSDAL: Amelia Tyagi is co-founder of The Business Talent Group.

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