Saving and Investing feature two vastly different mindsets. I will look at these financial mindsets individually and then compare them. My goal is to present you with an argument to see where you fall on the scale. Knowing your tendencies is the best way to make yourself financially secure.
What is Saving? My personal definition of saving is using money to provide financial security. For reference, my personal definition of investing is using money to provide financial freedom. The article “Financial Security vs. Financial Freedom” goes more in-depth into these topics.
I consider saving everything from paying off debt, making cash purchases, and saving into a 401K plan. Savers have an emergency fund and use budgets religiously.
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One source of income. For the most part, savers have one source of income—their job. Therefore, savers must be intentional with every penny that enters the home.
When the question arises, “How will we afford this item?” The answer is to cut expenses and save more money. I wrote the articles “Over-Budgeting” and “Over-Budgeting 2” based on the concepts of frugality.
The Magic of Saving. The magic of saving is that anyone can do it. Being a saver doesn’t require any special skills or talents. You don’t have to read the daily news or follow the latest blogs.
A saver’s goal is to ensure the expenses are less than the income. Once they have this discretionary income, they save some and use the rest for trips or special items.
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Savers are usually risk-averse, meaning they don’t want to take a chance with their money. Some savers build a scarcity mindset, but not all. A scarcity mindset states that there is not enough money in the world for everyone to thrive.
However, some savers stick with saving because they spend their time doing other activities. They don’t want to bog themselves down with investing blogs, books, videos, and research. They’d instead save into their high-yield saving account and 401K.
Becoming a saver. The first step to becoming a saver is learning how not to spend. This may seem trivial, but society NEEDS us to be spenders. We need to fight the urge of toxic consumerism and lean towards the teachings of minimalism.
If you are struggling with saving or just starting out in the real world, you can learn from the best saver out there—Dave Ramsey. I would first start with a book from his daughter, Rachel Cruze. She takes a deep dive into our financial mindsets from childhood and beyond in her book “Know Yourself, Know Your Money.”
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From there, you can move into a book by Dave Ramsey. I read his book “Baby Step Millionaires” and loved it. However, his earlier books focus more on his first “Baby Steps”. The book I read focused on the later steps.
Dave Ramsey’s first Baby Step is to save $1,000. It’s a great goal and one everyone should strive to obtain. If you can’t save $1,000, you need to determine whatever is draining your resources. I like to call it “having a hole in your pocket.”
Saving for college. While I was my Dave Ramsey kick, I read a book called “Debt-free Degree” by Anthony ONeal. This is an essential book if you are a saver because college may be your most considerable lifetime expense.
There are many ways to mitigate college expenses, but they require strategic planning. You can even take steps during your child’s middle school career. The critical takeaway from saving for college is to start as soon as you know you are pregnant (not kidding).
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Saving Plus. Just because you are saving doesn’t mean that you have to get a low return on your savings money. Let’s look at ways to increase your savings by having your money work for you. The article “Super Safe Savers” goes deeper into these saving vehicles.
- High-Yield Saving account. Right now, high-yield rates are trash, but they are still much better than a standard saving account.
- Series “I” Bonds. You can put a portion of your emergency fund into Series “I” Bonds from the US Government. They tie their interest payments to inflation numbers, so you can save while fighting inflation. Currently, they pay 7% interest, but these rates change every six months.
- USDC Stable coin. Yes, this cryptocurrency could be a little riskier for you, saver, but give it a shot. Put $100 in USDC on Voyager, and learn to build your trust in the system.
It may be scary for savers to invest in USDC crypto but look at the numbers. If you invest $1,000 into a high-yield savings account at 0.4% interest, you’ll earn $4 in interest for the year.
If you invest the same $1,000 into USDC at 9% interest, you will earn a whopping $90 in interest payments. That is an insane difference in cash flow.
Tiered Savings. I am not saying go crazy with USDC, but form tiered savings for your emergency fund. With “I” bonds and USDC, you can have your money back within three business days, so you only need to keep enough on hand to solve a quick emergency.
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If I had $60,000 in an emergency fund, I would layer as $20,000 in high yield, $20,000 in Series “I” bonds, and $20,000 in USDC. Let’s look at the annual interest payments.
| Account | Starting Amount | Interest | Ending Amount (1 Year) |
| High Yield Savings | $20,000 | 0.4% | $20,080 |
| Series “I” Bonds | $20,000 | 5% | $21,000 |
| USDC Stable Coin | $20,000 | 9% | $21,800 |
| TOTAL | $60,000 | 4.8% | $62,880 |
As much fun as it is to be a saver, watching compound interest grow your account is much more exciting. Yes, you will have to work your way up to investing in saving bonds and USDC, but, as you can see, it is worth it. Now next year, you’ll start compounding with $62,880.
One final step. The last step as a saver is to fund your Roth IRA. Yes, you probably have an employer 401K, but a Roth IRA will be your path to wealth. The hardest part of opening and funding a Roth is deciding where to invest your funds.
Happy Cash Flow Retirement 2
Index funds are the best way to fund your Roth and don’t require an extensive amount of financial education or study. I talk more about index funds in “The Magic of Passive Index Fund Investing” and “My 4 Favorite Index Funds.”
If you can fund your Roth, you will be in one of the best positions ever. If you decide to become an investor later in life, you will have a large pot of tax-free money to allocate how you wish. The Roth is the highest level of being a saver.
Conclusion. Saving is difficult in today’s society—so be proud of yourself. If you fancy yourself a saver, I caution against keeping all of your money in a standard savings account. Inflation is over 6%, and you’ll have a tough time keeping up without using the power of compounding.
Don’t let being a saver keep you in a box. There are many other ways to add more money to your accounts. Investing seems to intimidate many savers, but it is a process. I believe USDC will open a lot of eyeballs to the whopping amount of interest you can earn safely.
Continue to read and expand your thinking, and you will see an entirely new world. Make more money to save more money. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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