A whole new meaning to "scrimping and saving"

I got serious about saving money in 2018. I started my first savings account, and by the end of the year, I’d saved $1,855.

In 2022, I REALLY got serious about saving money. By the end of THAT year, I’d saved (and invested) around $15,000.

So, what was the difference?

That’s what we’ll talk about today.

This week, meet:

➡️ Scrimping vs Saving
➡️ How might one scrimp?
➡️ What does saving look like?
➡️ Budget Bites

Scrimping vs Saving

There are two types of savings habits: the type I started in 2018, and the type I started in 2022.

I think of them as “scrimping” and “saving.”

What’s scrimping?

Scrimping is when you prevent yourself from spending more.

When you “save $5” off an item that was on sale. When you “save $30/month” by buying from a cheaper grocery store.

Scrimping is:

• Couponing

• Cutting costs

• Rewards programs

• Making it so less money has to leave your bank account

Importantly, scrimping is spending-focused.

What’s saving?

Saving is intentionally and actively setting aside money for later. When you “save 15%” of your paycheck. When you “saved $400” for your house down payment fund.

Saving is:

• Paying yourself first

• Re-structuring your finances

• Starting with the money you HAVE and putting it somewhere

• Avoiding spending a significant portion of your income altogether

Saving is income-focused.

Which is better?

Both are necessary.

Scrimping is aesthetic. Saving is structural.

It’s like the difference between adding a coat of paint and new furniture to a room vs improving the house’s foundation or changing the floorplan.

You need to do both to make your house livable and pleasant.

Just so, you need to do both to ensure financially healthy habits.

HOWEVER.

If you scrimp without saving, you’ll always feel as if you’re living paycheck to paycheck. It’s like throwing a coat of paint in the living room while the roof is caving in.

Man cannot live by scrimp alone. Scrimpers will find themselves ultra-frugal, living restrictive lives. Scrimping is a necessity of poverty – but you can’t scrimp your way out of poverty.

How might one scrimp?

To scrimp is to embrace frugality. To pinch pennies. To clip and slice. To need less.

Examples of how I’ve scrimped:

• Fetch Rewards app.

• Credit card rewards points.

• Buying certain things in bulk.

• Timing big purchases during sales.

• Composting.

• Grocery outlet FIRST. Always.

• Only buying clothes when I can make a REALLY good argument for it to myself.

• Making homemade meals. And making them in advance.

• Alcohol is expensive, so I make homemade cider.

• Getting creative with what’s in my pantry, rather than giving up and going grocery shopping or ordering out.

• Thrifting vs buying new. Although… be careful out there.

  

For me, 2018 was the year of the scrimp. By necessity, not choice.

But, it led me to most boomer belief:

That a little financial struggle early on can teach a lot of valuable lessons about spending. Working in food service, rationing tip money, being a college student, living with roommates, eating beans and rice an uncomfortable amount… it puts some hair on your financial chest, for sure.

What does saving look like?

Now, to save is to foundationally change the way you think about your income. To re-frame the idea of surplus. To create your very own safety net.

Examples of how I save:

• Every paycheck, I move 20% of it into savings (at one job, they had the option for this to happen automatically in my direct deposit).

• I try to follow The 20/30/50 Rule (20% of your income toward savings, 30% toward wants, 50% toward needs).

• I “pay myself first” AND I pay myself last, too. I always put whatever “extra” money I can toward savings or investments, so I’m always surprised by how much I save.

• I relentlessly track my expenses, so I know exactly how much money is coming in and what’s going back out to wants, needs, and savings.

• I structure my expense tracking to prioritize the things I actually value.

• I choose to value savings.

• I keep 4 types of “savings” accounts: regular savings, high-yield savings, regular stock account, and retirement accounts. I have a system I always follow for how much goes where and when.

• I set savings goals, then gamify them so I actually follow them.

• Set immediate, actionable goals with numbers – ie, get $3k in my emergency fund, save 20% per month, etc.

• Let longer-term goals stay a bit loosey-goosey – ie, get enough so I can start looking at buying a house, etc.

2022 was the year I learned, for real, what saving means. I started these habits, and weirdly enough, by the end of 2023, I saved enough to even buy a house!

So… Are you a scrimper or a saver? Or a neither? Or both?

Budget Bites

🦐 Scrimp fried: A classic that was bouncing in my head as I wrote this.

🤑 NINK not DINK: This is a new one.

✈️ Adult money: Some days you stress over coffee, others you go to Italy.

🌼 Dillying: Thoughts to take with you during your work week.

“Wait, I need MORE”

A couple things happening in the Meet Your Money world:

💸 More budget breakdowns and real talk on finances here on the newsletter & on socials. Completely free, always.

🍷 Budget Club. Twice monthly. Currently at my house. With my friends. You’re not invited. (I hope to make this a recurring, free, online event soon… Stay tuned!)

📊 And coming soon – templates and 1:1 consulting time for those who need a little extra nudge.