Through the years I’ve gone through several phases in mindset about saving. Growing up, money was considered a mystery and no one ever talked about it. I was told it’s rude to talk to others about money. So let’s talk about money. I was never taught the proper way to save my money or even budget for that matter, so I had to get by through tough lessons and lots of research for what works best for me. It’s interesting to look at the different types of people saving money, which unfortunately is a low percentage of Americans.
There is no wrong way to save money, but there are smart ways. If you’re saving money in general, that’s better than most Americans. Three in every ten adults have no emergency funds at all.
The Hoarder
You are the type of saver that rakes in all the money and sits on it in your checking account. You love to watch your account grow and never likes to see it go away, often being called cheap. You sit on your pile of money like a king or queen, keeping it as a symbol of pride.
This is probably one of the worse ways to save money. You normally want your money to work for you, accruing interest and just growing over time. It’s a great feeling to have all that money in the reach of your fingertips, but if it’s just sitting there you’re losing even more money.
I started out in this phase, collecting over $10,000 before moving to New York. I grew up with very little so I wanted to grow my account and have that feeling of actually having money for once. I just unfortunately took it too far.
Another downside to having this mindset is getting the fear of losing it all. Once I reached the $10,000 threshold, I didn’t want to see my account go below that. That’s when I turned to supplementing my spending with credit cards. I didn’t need to use my credit card as often, but that’s how it turned out. That’s a dark place I never want to go down again.
Retirement Saver
This is the type of saver that, with the exception of putting together an emergency fund, puts all his saving money towards his retirement accounts. This saver know they will be working until retirement age and is dedicated to putting a percentage of their income towards their 401k or IRA.
Investing into your future is the best way to save your money, however I would recommend investing money into other accounts as well for diversification and more short-term goals as well.
If you’re only investing into a 401k for example, you can’t touch that money until retirement age, else you are hit with a lot of fees. Most savers stop at this stage and maybe put extra income aside into a savings account for their short-term purchases. This is one way to go, but I would recommend going further with your money.
Quick Shooter Saver
You may fall into this category if you love researching different stocks and place your investments into individual companies. You love to task risks for higher returns and aim for maximum capital. These types of people prefer to have their savings remain volatile, with the hopes it will come out on top.
Investing into individual stocks is a popular path to take, often leading to good returns, but also opens up for even greater losses. You can be vulnerable to losing money if you’re a bit too aggressive and not able to foresee future dips in the market. Those in this category likely lost a good chunk of money last month when the stock market crashed.
I love researching different companies to invest in, but I’m not too much of a risk taker and normally only invest about 5-10% of my portfolio into individual stocks. I tend to fall into the next category of investor.
Buy and Hold Investor
Those that are willing to step out of their checking account and ready to take on the intimidating stock market normally take this path. I went into this knowing who I was and immediately understood the type of investor I would be. Saving aggressively as much money as I could, but into mostly conservative stocks.
I’m not a risk taker, and often need to push myself a little bit to get out of my comfort zone. The stock market is a scary place for those uneducated and even scarier for those who understand it. I tend to lean towards index funds with a well-diversified portfolio. I get smaller interest rates but I know my investments are better protected than in other stocks.
I normally contribute to these index funds and walk away, focusing on the long-term returns. For an added safety net, I add to high yield savings accounts if I need money on shorter notice, but still earn a minimal return and a retirement account.
King of the Assets
I know quite a bit of these types of savers. They may dabble in the stock market from time to time, but are more focused on building up their personal assets. This includes investing into real estate or classic cars that can be resold for a profit in the future.
They are more interested in having liquid assets available to them than stocks in companies that could go bankrupt tomorrow.
Some build up a portfolio of only the “shiny objects” that holds high value and in great demand, like collecting Yeezies or designer bags. I was never interested in investing in these types of assets, but am very interested in buying real estate to rent out for an extra source of income.
There are countless types of savers out there and even more that are a combination of the ones listed above. Some may stash a percentage away each month and spend the rest, or have it sit in a Savings Account. The amount of options you take are endless. It’s important to do your research on investing and find the path that suits you best.
