If You Are Serious About Saving Money, Slow It Down

A woman inserting a coin into a white piggy bankToo many Americans find themselves stuck in the same cycle: money in, money out. Nearly every cent they earn is immediately put back into paying bills and other expenses. In fact, a whopping 78 percent of Americans live paycheck to paycheck, according to a study from Career Builder.

The weekly or monthly cycle is exhausting for millions. Most Americans struggle to make ends meet as-is, meaning even one unexpected expense could plunge them into debt. There has to be some answer, right? 

Some financial experts think that the answer lies in how old your money is. Not since it’s been printed, but since you acquired it. The older your money is the more secure your finances are, and that stability allows you to save more money and so on. But before we get there, let’s talk about what your money’s age actually means. 

“Aging” Your Money

The idea of aging your money is basically just a new take on an old philosophy: spend less money than you earn. To visualize where age comes into play, think of a piggy bank with a coin slot on the top and a stopper on the bottom.

The new money that you deposit sits on the top while you pull older money from the bottom. The less you spend, the older your money becomes and instead of using this month’s money to pay this month’s bills you may end up using month old money.

The key to saving is letting money spend time in your bank before you spend it. It’s a pretty simple concept and it all boils down to prioritizing your spending. By setting and sticking to a budget, you can cut out unnecessary spending, save more and sit back as your money ages itself. Planning out your goals can help you with your budget as you get a sense of how much you absolutely need to spend each month.

How Old Does my Money Need to Be?

There’s no single correct answer to this question since everyone’s financial needs are different, but generally speaking, you want your money to be at least a month old. The reason to age your money at all is to build some security, so really whenever you feel like your finances are stable your money is old enough.

Of course, there is such a thing as letting your money get too old. Saving for long-term goals like retirement is always smart, but that doesn’t mean you have to cast aside short term goals as well. Once you’ve built up your savings and have a more comfortable future, you should also feel a little more confident in your ability to book a vacation or splurge on gifts. 

Building Long-Term Financial Stability

As with any budgeting strategy, aging your money is all about setting you up for a better financial future. By spending older money and stacking newer money on top, you’re constantly padding your financial safety net. Planning your spending, setting goals and sticking to a budget all take a lot of diligence, but that’s the best way to age your money and prepare for your future.

Your end goal should be retired, and aging your money can help you age with less stress. The key to aging your cash is spending less than you earn, but after you retire your earnings will drop while your spending might not. While planning for retirement is a bit more complex overall, applying the strategy of aging your money is a simple way to ensure that you have a more stable financial outlook. 

Learn how to save now and retire early: Financial Independence Retire Early (FIRE) Explained.