The Many Definitions of Saving

savespendWhen we talk about saving money, what do we mean? I hear the word “saving” thrown around plenty, especially as a blogger who talks about it frequently. But I have found when people say that they have “saved money” they are often talking about very different things. Below are three definitions that I come across frequently:


Saving Definition #1: Not Spending

People talked about how they saved money by quitting their latte habit, for instance. They have cut an expense out of their routine or they decided against a big purchase that they normally would have made. This is great! They have taken an honest look at their spending and decided to NOT spend on an item that isn’t aligned with their goals and priorities. However, if they stop there, problems arise. Have you ever seen those old cartoons where a dam springs a leak? The cartoon character plugs the hole with his finger only to find that it causes another leak nearby. By the end, he has all fingers and toes blocking up various leaks and the whole dam collapses. The same can happen with this definition of saving, if you aren’t careful. Without a plan for your money, everything that you saved by quitting your latte habit can start to leak out through spending elsewhere. So, when you are patting yourself on the back for not spending, make sure to ask yourself the next question: what are you doing what that money saved?

Which brings us to the second definition…

Saving Definition #2: Putting Money in a Safe Place

This definition usually comes up when people are recapping their month or year. They will say that they were able to save $x to put in their 401(k) this year or that they saved up for a down payment on a house. They actively took the money that they didn’t spend, the difference between their income and spending, and put it away somewhere to be used (or not) at a later date. Of course, there is a WIDE range of “safe” places you can put your money, with varying levels of safety, from under your mattress to a low-cost index fund protected by a 401(k) tax-advantaged account. Both the places to save your money as well as the goals to save towards are up for debate, but if you are “not spending” AND “putting your money in a safe place”, you are ahead of the vast majority of people already!

And finally, we have the dangerous definition…

Saving Definition #3: Getting a “Deal”

This is the definition most used by marketers. The idea is that you are spending money on a product or service that you weren’t planning on purchasing previously, but the deal is so good and you are “saving” so much money, that you just have to pull the trigger. Groupon is the perfect example of a company that appeals to our desires to get a deal. However, when people say that they are saving so much money with Groupon on a nice dinner, I think it is actually a misuse of the word “saving”. Even if the deal is a good one and what you are getting is worth much more than you are paying for it, the act of buying a deal is spending, NOT saving. Is that to say that you should never purchase a deal? No. Spending money can lead to enjoyable experiences, especially when aligned with your priorities. However, you have to recognize that this is not an act of saving, as the marketers would have you believe.

It’s important to understand the different definitions of saving. The next time you use the word, think about what you really mean and use that to help guide your money decisions!

Have you found the term “saving” being used in other ways?

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24 thoughts on “The Many Definitions of Saving

  1. Dee @ Color Me Frugal May 12, 2014 at 7:40 am

    Definition #3 drives me nuts. That’s the classic Black Friday version of “saving” money, and in my opinion it’s often not saving at all unless you needed the item and were going to be purchasing it anyway. So often when we hear people talk about how they’ve “saved” money this way though, they are not talking about a planned purchase. It’s often an impulse buy.
    Dee @ Color Me Frugal recently posted: What Is Passive Income?My Profile

    • Mr NYBudget May 12, 2014 at 8:23 am

      I absolutely agree, Dee! Those impulse buys are killer to begin with and if marketers can make you feel GOOD about them by telling you that you are “saving”, then they are extra dangerous.

  2. Stefanie @ The Broke and Beautiful Life May 12, 2014 at 10:16 am

    Buying something on sale is not saving, it’s spending, SUCH an important point!
    Stefanie @ The Broke and Beautiful Life recently posted: “Real Beauty” in Real Life: Recognizing Your Own PowerMy Profile

    • Mr NYBudget May 12, 2014 at 11:31 am

      Right?! And yet, we still hear people talk about how much they “saved” when they bought that random item that they just happened across in the store!

  3. Phil May 12, 2014 at 12:26 pm

    Whenever money is being spent on frivilous things such as Groupon it is not really saving! I think many people don’t really know how to save or budget. It also drives me nuts when people won’t put any cash into a company’s 401K plan. That is long term savings for the future and is a great way to save money out of a paycheck pre-tax!
    Phil recently posted: An ode to Mother’s Day. The Good, The Bad, and The Embarrassing.My Profile

    • Mr NYBudget May 12, 2014 at 12:33 pm

      It drives me crazy too! I generally want good things for people and so many tend to sabotage themselves, financially!

  4. The Jackal May 12, 2014 at 2:51 pm

    Great points Mr. NYBudget!

    Under definition #1 you use the word ‘their’ when you should use the word ‘there’.

    • Mr NYBudget May 12, 2014 at 3:02 pm

      Thanks – great catch!

  5. DC @ Young Adult Money May 13, 2014 at 1:28 pm

    I drive people insane by asking what they mean when they use certain words. It’s amazing how the meaning of a word, and subsequently the context of a message, can change depending on how the speaker/author is using a word. I used to be a political blogger and one post I wrote about how the word “conservative” is completely meaningless today.
    DC @ Young Adult Money recently posted: 5 Steps to Save Money on GroceriesMy Profile

    • Mr NYBudget May 13, 2014 at 5:21 pm

      Good point – and I think the real danger is not only when someone isn’t communicating effectively to others, but when they are confusing the meaning for themselves! Many times, someone isn’t trying to be dishonest and they end up just hurting their own cause.

  6. Andrew@LivingRichCheaply May 13, 2014 at 1:49 pm

    Ah yes, #3!! Getting a deal is not saving money…though of course it could be saving if it’s for something you would buy anyway. Like a $5 off coupon for groceries or something. But for the most part, many people say “save” when they really mean “spent less.”
    Andrew@LivingRichCheaply recently posted: Are You Suffering From Technology Overload?My Profile

    • Mr NYBudget May 13, 2014 at 5:22 pm

      Exactly – if it is something you would have bought anyway, it is saving. But even that is hazy. People are good at convincing themselves that they “needed” something anyway, or would have purchased it regardless.

  7. Even Steven May 14, 2014 at 12:59 pm

    It definetly depends on if you are already planning to purchase that item. If you are buying toilet paper and save $2.00, that’s saving money. If however you are buying Groupon deal because you are saving so much money, then it lacks the saving definition.

    My example would be “saving money” I’m already going to drink a beer and go out on a Saturday, why not go to a brewery tour and only pay $10. Even this could be argued a little bit I suppose, but remember you are arguing against beer, ha.
    Even Steven recently posted: Saving Money on Beer-The Brewery Tour and Craft Beer WeekMy Profile

    • Mr NYBudget May 14, 2014 at 1:06 pm

      Ha! Well, I can’t really argue against beer! But I do think people need to evaluate all their choices. There is always the possibility of having people over to your place to have beers at a much cheaper rate than going out.

      My issue occurs when people buy a new pair of shoes for 25% off just because they saw them in the window and then tell me that they saved money. This definition isn’t always bad, but it has the most potential to be dangerous.

  8. EL @ MoneyWatch101 May 14, 2014 at 1:30 pm

    It goes to show how money behaviors can be misleading to some. People say they saved a dollar by clipping coupons, but they still spent money to get a product they don’t need. If they did need it then to get the best result that dollar you didn’t spend should be redirected to “safe savings” . People who coupon I believe do not adhere to that second important piece of the puzzle. They only focus on the spending thrill.
    EL @ MoneyWatch101 recently posted: The 10 Secrets to Build WealthMy Profile

    • Mr NYBudget May 14, 2014 at 1:34 pm

      I agree, the “spending thrill” is a great term for it.

  9. Broke Millennial May 14, 2014 at 1:41 pm

    I’ve certainly used all those versions of “saved” when I discuss money. I’d say #2 is probably the most common way I think about money, but #3 certainly pops up when I’m shopping (hello recently opened Banana Republic Credit Card).
    Broke Millennial recently posted: Guess Who’s Back?! (And with a new job)My Profile

    • Mr NYBudget May 14, 2014 at 1:53 pm

      Haha! Nice – yeah, that shopping bug can bite!

  10. Jen @ Jen Spends May 19, 2014 at 1:36 pm

    I recently wrote about #3 in depth. I started out as a deal blogger and changed direction after a while because it felt dishonest. My family hasn’t achieved our financial goals by spending money on lots of deals, and nobody else will, either. I didn’t feel right trying to profit by tempting others with deals they probably didn’t need. When there’s a deal on something I really need anyway (rare), fantasic. Other than that, it’s not saving at all. This is one of the biggest mistakes I see financially illiterate people make.
    Jen @ Jen Spends recently posted: 5 Ways You’re Not Really Saving MoneyMy Profile

    • Mr NYBudget May 19, 2014 at 1:40 pm

      Good for you Jen for making the switch! You are absolutely right that deals on things that people actually plan on purchasing anyway are much more rare than people like to admit.

  11. Free To Pursue May 19, 2014 at 1:44 pm

    Saving. All three definitions are equally accepted as definitions when referencing the dictionary. If only they bore equal weight in real life.

    Saving for the long term or with long term goals in mind is the only type of saving that leaves a lasting impression with you, the saver. You feel differently about life and about yourself when you save for the life you want to lead, not only in the future, but also in the present. If only people could experience the feeling having long term savings offers ahead of time, I think long-term savers would no longer be the minority.

    Keep spreading the message Mr. NYB. If we collectively hear a message often enough, maybe it can help turn the tide.

    • Mr NYBudget May 19, 2014 at 3:58 pm

      Thanks! I’ll keep at it if you do! Some day we’ll figure out a way to band together and be heard on a larger stage!

  12. Abigail May 20, 2014 at 3:36 pm

    I agree that a lot of “deals” aren’t saving. I buy Groupons for a local spa place to get some low-cost services. I just don’t count it as saving. I count it as getting something I wanted cheaply.

    That said, there are plenty of Groupons that people buy for things they already planned to buy, whether that’s their favorite restaurant, items they need or services they were going to get anyway.

    We’ve gotten Groupons for lawn service (my husband and I have health issues) and window tinting (we’re in Arizona). We saved a couple hundred on each.

    The trick, as you point out, is to actually have savings to show for it. In the last year or so, we’ve started consciously putting aside money we save from sales, coupons and GCs through rewards programs.

    As long as you’re buying purposefully — and you can point to the savings in your account — I think it’s fair to call discounts savings.

    • Mr NYBudget May 20, 2014 at 3:50 pm

      I agree that you can use Groupons to your advantage, but the trouble comes when you are getting their emails sent to you daily and you peruse their site for deals. After a while, things you weren’t thinking about BECOME things that “I was going to purchase anyway”. It’s a blurry line sometimes.

      But absolutely, if you keep that in mind and are buying purposefully, you can come out ahead. It’s just that most people don’t, which is why Groupon is profitable.

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