Quit Spreading Yourself (And Your Money) Too Thin

by Paula Pant on · 10 comments

Want to save money? Focus­ing on ONE spe­cific goal can be more effec­tive than spread­ing your­self (and your money) too thin.

Con­ven­tional wis­dom says that the best way to save more money is by ear­mark­ing small amounts of money towards a wide gamut of goals.

For exam­ple, your monthly sav­ings might look like this:

  • My next car pur­chase — $75 per month
  • A “rainy day” fund — $100 per month
  • A down pay­ment on a house — $150 per month
  • A trip to Italy — $50 per month
  • A new dish­washer — $50 per month
  • Total Sav­ings — $425 per month

But this spread-yourself-too-thin strat­egy can be dis­heart­en­ing. After 1 year of sac­ri­fic­ing con­cert tick­ets, restau­rant meals and cute new clothes, you’ve only man­aged to save $600 towards that trip to Flo­rence and Rome. That won’t even buy your air­line ticket.

What’s wrong with this sav­ings strat­egy? Lack of focus.

(Now, a quick dis­claimer: I’m not say­ing this is a bad strat­egy. If it works for you — awe­some! This post is writ­ten for peo­ple who have tried this strat­egy, felt dis­heart­ened by their lack of progress, and — as a result — have given up on their dream trip to Italy.)

What’s the alter­na­tive? Focus on ONE goal at a time. Stop spread­ing your­self thin.

Here’s what that model would look like:

  • A “rainy day” fund: $425 per month

After 8 months, you’d reach your goal of a $3,400 “rainy day” fund, at which point you turn your com­plete, unadul­ter­ated focus to another goal.

You start putting $425 per month away for that trip to Italy. After 6 months, you have enough saved to go there.

When you return from Italy, you start focus­ing on the next goal: a new dish­washer. Within 1 month, you’ve got it.

Isn’t that more sat­is­fy­ing than spread­ing your goals too thin (and there­fore need­ing a longer time frame to reach those goals)?

This idea comes from the “snow­ball” method of pay­ing off your debt. It’s a the­ory that states that you should pay down your small­est debt first, regard­less of its inter­est rate. Focus all your money on just one spe­cific debt. Once that debt is repaid, focus all your money on the second-smallest debt. And so forth.

That the­ory has many crit­ics who argue that you’ll pay a lot more in inter­est by focus­ing on your small­est debt, rather than your highest-interest debt. But its sup­port­ers say that focus­ing on one small goal at a time is more effec­tive than spread­ing your­self too thin.

The hyper-focused method may (or may not) be the best method for repay­ing debt — but it’s cer­tainly a great way to save for a goal.


by Paula Pant

Thanks to wise money man­ag­ing, Paula Pant has trav­eled to 27 coun­tries, pur­chased a 99-year-old Vic­to­rian home near cen­tral Atlanta’s most beau­ti­ful park, and has never — ever — had a penny in debt. Her blog, Afford Any­thing, is based on one rad­i­cal idea: money should never hin­der your dreams.
Paula Pant
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