Recently, some of our clients shared that they were losing money on their investments. At first glance, that sounds like a concern—but these clients weren’t upset. In fact, they were content with their financial situation. Why? Because they understood the critical distinction between saving money and wealth building. This mindset is key to financial planning and long-term financial stability.
Let’s start with saving. We're big believers in setting money aside. We're campaign sponsors for Inland Empire Saves and San Diego Saves, and proud to be multiple-time “America Saves Savings Champion” designees. We champion the value of smart saving habits. Whether it’s putting money into a savings account, a money market account, or simply building an emergency fund, saving is a crucial step in achieving your financial goals.
Saving money helps you stay afloat during emergencies, reduces the need for consumer debt, and provides peace of mind. But there’s a common misconception: saving, by itself, is not wealth-building. Most people assume that storing cash in a savings account is enough, but low interest rates and inflation mean your savings accounts are slowly losing value over time. So it's essential save money, it's only one part of managing your personal wealth.
You should absolutely work towards savings goals, like adown payment on your dream home, a new car, or to reach a defined savings goal. But you should also understand how saving money fits into the larger picture of money management. To save money the best way, set clear savings goals and track your progress. This includes identifying short-term goals like paying utility bills or grocery shopping more efficiently, and long-term goals such as retirement planning or purchasing property.
One tip? Start with a few simple steps: create a budget, reduce unnecessary spending (like online shopping sprees or unused cell phone plans), and stick to a consistent savings plan. Use a smart thermostat to cutdown utility costs or develop a detailed shopping list to avoid impulse buys. Shop around for cheaper car insurance. These small lifestyle changes can lead to big savings.
Save money towards specific things. For example, whether you decide to purchase a car, or save money toward a mortgage, give every dollar a job. If one dollar is meant to purchase gifts for your family, you'll save it differently than money that is meant to be part of a mortgage down payment.
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One of the most powerful steps you can take is eliminating debt. Every dollar you pay in credit card interest is money that could be working toward your future, like investments, mutual funds, or a larger emergency fund. Monthly payments drain your checking account, reducing your ability to invest or save money fast.
A good strategy? Follow a snowball or avalanche method, or talk to a professional about setting priorities and choosing the right debt management plan. By managing your paycheck wisely and reducing high-interest debt, you can allocate more of your income toward wealth-building activities.
But there's one kind of debt that we don't want you to avoid; plan to buy a house if you haven't already. When you save money every month, consider it practice for making your mortgage payment some day.
If you're close to retirement, short-term losses in the market can hit hard. Your savings accounts and investment choices should shift toward lower-risk vehicles as you age. While these investments might not earn the same interest, they help preserve the value you’ve worked hard to build.
Certified Financial Planners can help you protect your retirement funds by guiding you through risk assessment, diversification strategies, and ways to save. We also recommend checking out our free “Basics of Financial Planning” booklet. It’s full of tools, examples, and other options to guide your journey.
Download the Basics of Financial Planning from our selection of free financial education guides.
You must do more than save. You must invest, manage expenses, and plan for both short- and long-term goals. It’s about turning today's income into tomorrow’s financial freedom. That could mean investing in mutual funds, real estate, or even education.
For instance, paying for college is an investment. A degree in the right field can lead to a significantly higher income, sometimes over a million dollars more across a lifetime. But this payoff depends on other factors, such as choosing a cost-effective school and limiting debt. Vocational programs, apprenticeships, and certifications can also lead to lucrative careers.
If you contribute to a 401(k) or IRA, you’re already on your way. When markets drop, your automatic paycheck contributions buy more shares—an advantage over time. As the value rebounds, so does your return. This is where patience and strategy meet.
Another example of ways to invest includes mutual funds. You could also put your money into individual stocks. Or you could purchase real estate. Some people even explore cryptocurrency or collectibles as alternative assets, though these carry higher risk. Always do your research and consider speaking to an advisor before putting money into riskier investments.
Wealth isn't just about money, it’s also about your lifestyle and opportunities. Owning land for a future house, having time for family, or being able to afford healthier food are part of a "rich" life. A smart consumer considers not just what they spend, but what they gain in return. Sometimes the best investments are in health, relationships, or peace of mind.
The size of your savings account isn't the only way to measure how successful your life is. Having a nice car or cash to spend is nice, but being "rich" really means not being worried about bills or expenses from week to week. Controlling your spending and working to save money slowly over time is what real success looks like to us.
Every dollar you spend today affects your finances tomorrow. That’s why budgeting, tracking expenses, and making intentional purchases, like cutting unnecessary utility bills or renegotiating your cellphone plan, are so critical. Managing your money wisely gives you more control and opens up more ways to save and invest.
Control spending, avoid using credit cards and racking up big bills while growing your savings over time, and you'll have enough money left over every week to save for the most important investment, which is you.
To recap, here are the essential takeaways:
Start saving today, even if it’s just a few dollars a week. Set your priorities, understand your income and expenses, and look beyond the numbers. You'll learn new ways to save money and reduce expenses over time. With steady progress, you’ll be better positioned to reach your dream home, a comfortable retirement, and the financial freedom you deserve.
Be sure to pledge to save during America Saves Week, and if bills are preventing you from being able to save, contact us for free counseling and assistance today.
