People often ask me for tips on how to budget, save, pay off debts, etc. There are many small things we can do to improve or better manage our finances. Starting today, I will share a different tip with you each Thursday. Welcome to the first edition of Thursday Techniques, Tips and Tricks.
There are many financial experts that have their recommended methods for solving financial problems. Most of these methods are not new. I like to teach others to do things similar to the way their grandparents or great grandparents might have done them. When researching these old fashioned tips, I am always amazed at how similar they are to what is being promoted by many of today’s financial experts. Sometimes I come across something I have never heard before. Over time, I usually find additional sources that support that unique golden nugget of a tip. Today’s tip is one of those nuggets that will help you accomplish your savings goals.
In 1917, Albert Atwood wrote a book titled “How To Get Ahead: Saving Money and Making It Work”. In that book he wrote, “Nearly all mechanical devices for saving are a tacit acknowledgment of the weakness of human nature. But how much better it is to acknowledge we are weak enough to need a savings device than be so weak we cannot save at all!” Atwood presents several methods to help people save. One of those methods is the subject of this article.
Atwood writes, “Anyone who enjoys figures would be helped by the ingenious device described in the Investors’ Magazine. It was the work of a young man, who drew a chart, or graph, showing by a dotted line the amount of money expected to be saved and a solid line for the amount actually saved. If the two lines coincided, of course, the scheme was being carried out perfectly. The farther the solid line sagged away from the dotted line the less was being saved, and the farther away was the accomplishment from the purpose. One of these charts shown was explained by its inventor in an interesting way:
‘I have arranged a scheme so that I can actually see my hoard growing. My system is simple. It requires about two minutes a week, but it stimulates my saving instincts just enough so that I have acquired a fine nest-egg since I started doing it. The first thing I did was to procure some paper ruled off into squares. Horizontally the squares represented five dollars each. Perpendicularly, the squares represented weeks. Then I went to work to plot my ‘curve.’ The first week I saved five dollars and placed a dot opposite the first five- dollar mark and ran a line up from the zero- mark—that is, the intersection of my constants. Perhaps that isn’t clear to you, but you will see that the more nearly vertical my curve runs the faster I am saving. Up to the fifty-dollar mark —that is, ten divisions of my vertical—I made a mark. That represented my temporary goal. If I had saved that amount in ten weeks my variant would have been a line running at forty-five degrees. As it was, it took me twice that long. Then I decided that I was going at too slow a rate, so I increased my saving each week, and the line shot off at a sharp angle upward. In that way I could actually see the improvement I made. Every time the line begins to sag a little I take the hint and deduct a nickel or a dime or a quarter from my luncheon money or other expenses. I stick to it until the curve straightens out. It seems a little thing, but I never saved a cent before I started doing it.’
If you are having a tough time understanding how to implement this method, let me introduce you to an additional source I found that reinforces this tip as a viable way to save money. In 1948, Coronet Instructional Films created a video for use in schools titled “Your Thrift Habits”. The main character learns from his friend and parents how to budget and save for the purchase of a camera. During the video, the technique described by Atwood is demonstrated. The video, which is embedded below, demonstrates how and why we should use the technique. Do you need to save money for something but find it hard to accomplish? After watching the video, sit down with graph paper and create a graph to help you accomplish your goal. Make sure to watch the entire video. If you would like a copy of Mr. Atwood’s book, go to Google Books and do a search for Albert Atwood “How To Get Ahead”. You can download it for free to your computer, tablet or eBook reader.