Much has been made about a recent dramatic increase in the personal savings rate. But the headline masks a couple of more important realities. First, the pandemic has divided the economy as never before. People who have lost their jobs aren’t saving more. In fact, many are running out of unemployment benefits and are barely hanging on. And second, those who are saving more are the ones who are still gainfully employed and their increased savings rate is due to the fact that they’ve been forced to spend less on everything from vacations to entertainment to their kids’ activities.
In one of my favorite movies, The Shawshank Redemption, prisoner Andy Dufresne vividly demonstrates the power of hope. Wrongly convicted for the murder of his wife, his hope that the truth would one day come out sustains him through the daily horrors of prison life.
Incredibly, when the truth finally does come out, a corrupt warden refuses to acknowledge it. That would be enough to crush most people. But Andy refuses to give up. He maintains his hope, and he acts on that hope by chiseling an escape route a tiny bit at a time—for twenty years! Twenty years of hoping, and twenty years of doing a little each day to achieve what he was hoping for.
I thought about The Shawshank Redemption recently while reading yet another story about people lack of emergency savings along with the usual finger wagging lecture about our need to save more. Maybe we don’t need another lecture. Maybe we need more hope.
Why be normal?
Our culture does its best to discourage us from saving by hijacking our hope. “Buy Now!” the marketers scream, convincing us that whatever they’re selling will fulfill our hope for happiness. So we buy. But the happiness is short-lived. So we buy again, and our savings rate stays stuck in neutral. It feels more like a scene out of Groundhog Day.
That goes a long way toward explaining why the norm in our culture is to live without a reserve. Why the norm is for young people to graduate from college with a ton of debt. And why the norm is to save far too little for our later years.
The funny thing is, all the knowledge we would seem to need in order to do things differently is readily, freely available.
Want to build an emergency fund? Pay for college without debt? Save enough for retirement? Just do a quick Internet search and you’ll find countless instructional articles and videos.
And yet, countless people stay financially stuck.
Maybe financial knowledge isn’t enough. Maybe we also need to get our hearts involved.
The elephant in your life
In their book about making lasting positive change, Switch, Chip and Dan Heath use the metaphors of an elephant to depict our emotions and a rider on top of the elephant to depict our knowledge. No matter how hard the rider uses his knowledge, logic, and reason—no matter how hard he tugs at the reins—the elephant will easily have his way.
We need knowledge, to be sure. But in order for knowledge to move us forward, it needs to be applied to something our heart desires.
Make an emotional connection
No one hopes to have three to six months’ worth of living expenses in a savings account. On its own, there’s nothing motivating about that.
But after spending enough time in the prison of paycheck-to-paycheck living, some people start to envision a better, less stressful way to live—one in which there’s peace of mind and less stress in their marriage because there’s money in reserve—and that brings the motivation to save.
No one hopes to spend less on entertainment or clothing or vacations. That’s illogical.
But some people can envision their young kids being able to go to college one day and then graduate without the ball & chain of a five-figure student loan tab weighing them down, and that motivates them to find the money to save. It doesn’t feel like spending less; it feels like spending more intentionally to meet a goal that matters to them. It feels like an expression of love for their kids.
What is it for you?
At one point in The Shawshank Redemption, Andy says, “Hope is a good thing; maybe the best of things.” So true.
What are you hoping for? What better future can you envision?
Take the steps you need to take this week, whether that means opening a dedicated savings account (far better to keep savings separate from your checking account), opening a 529 plan account for your child, or increasing your workplace retirement plan contributions.
But before you do, get really clear about why you’re taking those steps.
We’ll all get better at finding the money to save and invest when we get better at hoping.
“Be joyful in hope.” – Romans 12:12
Who else could use some inspiration to save or invest? Why not send them a link to this article?
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