Less Now, More Later

Less Now, More Later
That’s the essence of taking care of oneself financially.

And I would argue it is the essence of how to achieve financial independence.

By living on less than one earns, the difference becomes usable for one’s future.

What to do with the first money saved? Put it into a savings account. An emergency fund is the first goal.

Massa Marittima, 1891
Massa Marittima, 1891

How Much?
Opinions vary on how much to keep in an emergency fund. And “how much” does not mean anything if one does not have an emergency fund. Nor enough to put into it.

We Hear, But…
Although we hear the message to save when we are young, we often don’t take it to heart. And for often reasons we consider good.  See: Why Young People Ignore The “Saving For Retirement” Message. And What To Do About It  and If You Are In Your Twenties, Do Not Save For Retirement .

Havana, Cuba, 17th century.
Havana, Cuba, 17th century.

My First Time
When I got my first “real” job in a big corporation, I felt like I was probably grown up enough to think about saving. I decided I needed to do something that everyone seemingly had been yammering about. I needed to save some money.

I had no idea if I had enough money to save some. I had no clue about my finances, I had no clue whether I was in the red or in the black. I could not tell you what my expenses were compared to my income. But since I had finally decided to save some money, I thought I should do something.

So one fine day the following week, I transferred $15.00 from my checking into my savings account. Immediately I was in a panic, as I had no clue if would need that money within days. So the next day I transferred the money back to my checking account.

In retrospect, this incident highlights an important point for me: actions done without context are arbitrary and likely to fail. Before I started saving, I needed to understand where I stood financially.

Shortly after this macabre dance of transferring between checking and savings, I initiated a weekly transfer from checking to savings. Modest at first, but it got me on the right track. Thereafter, I started participating in the company’s employee stock purchase plan. I realized that was a simple way to look to the future with small impact on my present.

Over time, I changed jobs, and as my income and my awareness increased, I saved more, and invested more. My perspective and orientations changed as I grew. I changed my investment focus to Dividend Investing. I describe my route to and participation in Dividend Investing here .

Trinity College Bridge, 1841.
Trinity College Bridge, 1841.

We are all familiar with the many exhortations available on how savings and investments can grow if given time. All major mutual fund companies, brokers, and financial advisors continually stress how “if you invest X dollars a month now, and if things increase Y percentage, then after Z years you will have a lot more.

In my view, those encouragements serve two purposes. Or, like advertising, serves two goals. One is to reassure those who already made the decision to save and invest. The second is to surround the non-participants with enough advocacy so that they will consider it.

More Now, Less Later?
Certainly, having more now feels a lot better than having less now. It is the marshmallow test of life. By delaying immediate gratification, we allow for greater rewards later.

How did you get to understand that less now for more later is the better way? Send a reply using the Contact page.

Massa Marittima is a town in the province of Grosseto, southern Tuscany, Italy,. The illustration of Massa Marittima is from “L’Italia geografica illustrata, etc” (1891) at the British Library.

The 17th century illustration of Havana, Cuba is attributed to Atlas Beudeker (c. 1600).

The Bridge at Trinity College, Cambridge, (1841) is from “Le Keux’s Memorials of Cambridge: a series of views of the colleges, halls, and public buildings, engraved by J. Le Keux; with historical and descriptive accounts by Thomas Wright … and the Rev. H. Longueville Jones” at the British Library.

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