Painless Saving: Tricking Yourself into Saving a lot More Money

By Mandelman

Have you noticed that we are fairly terrible when it comes to saving money for our futures? And I’m not just talking about retirement, I’m talking about for any reason at all… we’re just plain bad at saving money all the way around.

Lot’s of smart people have written what amounts to countless reams of paper on the subject of why we don’t save more than we do. I don’t know of any that have just come out and said what the real problem is… for most people saving is hard, like next-to-impossible-hard… and it’s absolutely no fun.

Of course, saving is just like other things in life… those who can afford to save, in general, save more. No, not always, but usually. And the closer we get to retirement age, the more we save, albeit much too late in the vast majority of cases.

Why? Do you really wonder why more people don’t save more? Because I think you know why… after all, there are lots of reasons. I mean, let’s start with the various market bubbles that since the 1980s seem to pop every so many years. We save and invest… and then we lose most or all of it when the markets collapse for reasons far beyond our control or comprehension.

Remember the lie we were all told back in the 80s and every year since then: Invest in equities (stocks), diversify properly (mutual funds), contribute regularly (payroll deductions), and stay in for the long run (forever)… and everything will work out just fine. What a pile of crap that turned out to be… complete and utter nonsense.

Let’s just take a look at the S&P 500 Index, a nice, safe, index that should be considered playing it safe as for as the stock market is concerned. Let’s go back to 2000 and see how we did putting our $100,000 there that year.

Well, in 2000, the S&P fell by 10.14 percent… so we’re down to roughly $90k. In 2001, the S&P fell by another 13.04 percent, so we flirting with 78k. In 2002, the S&P fell by 23.37 percent, so we’re right around $60k… so far we’ve lost 40 percent of our nest egg.

Now, in 2003, the S&P went up by 26 percent, so we were back to $75k. In 2004, it went up by 9 percent, taking …read more