Spreading Your Money Too Thin

There is a line from JRR Tolkien’s “The Lord of the Rings” which I keep thinking of in reference to today’s blog. Little old Bilbo Baggins has just had his “eleventy-first” (111th)birthday and he turns to his friend Gandalf and says, “I’m old, Gandalf. I know I don’t look it, but I begin to feel it. I feel stretched and thin, like butter scraped over too much bread.” Tolkien was such a master with story and words, and I think we all relate to that “stretched and thin” feeling, especially when we relate it to our finances.

As you know by now, I am a huge proponent of saving money and having a plan for your money. However, there are times when you are just trying to do too much. For instance, I was talking to someone the other day who wants to start a savings plan for Christmas, travel at Christmas, a vacation, Dentist bills, a new computer, a new car, new furniture in their house, and they are paying off debt. All this and their ideas didn’t even include an emergency savings fund. Now, I believe in stretching your money, but sometimes if you stretch your money too thin, it will take you forever and you will lose hope in the waiting. It is better to let go of some of your “projects” and so you have more to fund the ones that you want or have to do THIS year.

Sometimes, when your income is limited, you have to choose what dream you are going to focus your money toward. Now some savings are not “optional” in my opinion and really should be part of your budget like an emergency savings account, the Dentist, and even Christmas. Let’s face it, you are going to spend the money for Christmas whether you have the money or not… although you can change how much you spend on Christmas. You need to be realistic about your travel plans as well. Are you going to make that trip to see your family whether you have the money or not? If the answer is “yes” and you don’t plan for it and have money set aside, then you are just going to incur more debt.

What Matt and I do is we look at the whole year and determine what the focus of our savings is going to be. We always put money in our savings account no matter what, but for our other dreams and projects, we pick what is really important to us in that year. So we wouldn’t have a year purchasing furniture and trying to buy a new computer. For last year our focus was paying down the loan that we owe on our car. That is still important to us and we are still putting extra to our car this year, but we shifted the focus of our savings this year to really getting our savings where we wanted them to be so that we could do some business investments.

I am not saying don’t begin saving for those other projects. I already have a savings account for our 10year anniversary next year. Although there is not much in it right now, it reminds me that it is coming up, it is important to us, and we need to be purposefully saving. However, I realize that that is not where our focus is for our extra money and our savings right now. So all I am saying is, save for your dreams, but choose some to accomplish this year, and realize that you probably can’t accomplish them all this year. I know it’s not fun to not get to do every thing you want to, but the reality is if you spread your extra money too thin, you are most likely going to burn out in the waiting and you won’t end up accomplishing any of your savings dreams.