Why People Don’t Save

“I have some other things I’d like to do,” he said with a slight hesitation in his voice. “So, I don’t think I can commit to that right now.”

He was responding to my encouragement that he establish a regular saving plan.

How unfortunate. Because except for those rare souls who win the lottery or receive an unexpected windfall, I’ve never seen anyone achieve financial success without a commitment to saving money. 

Sadly, this young man isn’t a rarity. I see people all the time wrestling with NOMO, FOMO, and ROMO.

NOMO. Some people are unable to save due to NOMO, or “no money.” They simply do not earn enough to pay their monthly living expenses and save money too. These dear folks are not the focus of this column. 

FOMO. I think my friend who couldn’t (technically “wouldn’t”) commit to a regular savings habit is a victim of FOMO, or the “fear of missing out.” 

He’s not alone. As incomes have risen across our society over the last few generations, so have consumer opportunities—and consumer desires for immediate gratification.

Stashing money into some kind of savings plan doesn’t feel very fun, especially when our minds are wondering:

“What if I never get to…take that luxurious Hawaiian vacation…buy that new truck with all the bells and whistles…build my dream home…enjoy a new bass boat and a fishing camp?”

Be honest with yourself. Has the fear of missing out on something now caused you to avoid thinking and acting responsibly regarding your future?

FOMO is real, and it’s powerful. 

But you want to know what is even more real? ROMO.

ROMO is the “reality of missing out,” and that’s something that should make us tremble. 

When we don’t save now, we miss out on so many great opportunities later. That failure to save is like having a gold coin placed in our pockets each morning, only to have it evaporate at midnight due to non-use. 

Except, that gold coin isn’t money…it’s time. 

Here’s the sober truth: Money loses value over time. This isn’t just due to inflation, but also to inaction. Every dollar has an unseen “lost opportunity cost” attached to it. 

For example, my failure to save $100 a month over the last 20 years didn’t just cost me $24,000 (i.e., $100 x 240 months). It actually cost me over $80,000! That’s what I would have today if I’d invested that $100 in a large cap stock index like the S&P 500. 

The difference between $24k and $80k is a vivid picture of “lost opportunity cost.”

Listen, a saving plan is not a prison sentence. In fact, it’s just the opposite. When you save systematically, you have more money available for fun “once-in-a-lifetime” trips and the like.

FOMO has a way of blinding us to ROMO. It urges us to spend it all now rather than save some for later. It makes us forget all about planning for the future. 

But the future isn’t an illusion. It’s real, and it’s coming at us all like a freight train. 

Are you ready for it? Do you have a saving plan in place that will allow you live with long-term peace instead of eventual regret?

Actually, when you think about it, a good saving plan is a GOMO, a “giver of more options.”

If you’re worried about your financial future, I’ve got a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

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