Pool your Money into Savings

Let's talk about Assets

Consider assets equivalent to pools of capital. Ponds support my theme better, however, so I will interchange Pool and Pond. In a landscape, ponds attract wildlife (opportunities) and develop a regenerative ecosystem. Assets can be likened to trees, flowers to dividends, the influence of the pond on the weather to cash flow, plant variety to diversity and resilience, and the beauty of the landscape represents security.

That last one may be a stretch but the beauty that a landscape can inspire is equivalent to what a healthy savings account can do as we will see.

Many people have no ponds in their personal financial landscape. They only have dry ditches through which the money flows away barely leaving a trace on the surface. Capital flows are great for the economy at large but remember that even the construction of a prison increases GDP. On the personal scale, we want to slow the flow down and pool our resources. This is the best way to build and maintain wealth.

Today's article is not for those struggling to make ends meet or looking to create impact by clipping coupons. If you are in this position, I totally sympathize with you. My first home purchase left me with four hundred dollars for utilities and groceries. I had no other debt at the time and I was young an very naive. Moreover, when I was uncomfortable with the terms of the loan, the people I turned to for advice assured me that buying a house was a good investment WITHOUT even looking at the numbers! They were my parents and I figured they must know a little bit about how the world worked so I took that as confirmation and signed up for the loan. That was a huge mistake. If you are in debt right now, do everything you can to eliminate it post-haste.

Build a Savings Pond

Today we are going to talk about building ponds. The savings pond is an interest-bering savings account with a balance that will cover at least twelve months of your living expenses. Given the average values for household expenditures in the United States, and our above-average skill set, that looks like thirty-six to sixty thousand dollars. Depending on where you start, this should take you twelve months or less. If saving twelve months of living expenses in a year (50% savings rate) is difficult, you need to increase your income and/or lower your expenses.

But wait, the experts say I only need three to six months of expenses? Great, then you already have a head start on the rest of us. I plan to eventually save three years of expenses but this is the first stage. Building significant savings is advantageous because it teaches us the skills required to manage money (patience, prudence, self-discipline and forbearance) but it does not require a whole lot of thought apart from signing up for an interest-bearing (often called high-yield) savings account. While the timelines for investing are significant, building savings is a quick win that insulates us against personal economic shocks such and lays the foundation for success with investing.

We build this pond first because it builds the skills required to manage money. When you move a pre-determined amount of money into savings every month, you are building the habit of self-discipline. You are keeping a promise to yourself to look out for your own best interest. Now, isn't that what you always wanted in a partner or a parent? Every time you make a deposit into your savings account, you are practicing prudence to prepare for your exciting and unknown future. Every month that you increase the balance, you are building patience and the ability to follow the process. Finally, every time something comes up and you choose to protect your savings instead of "investing" in a new purse or spending the money on a girl's trip, you are practicing forbearance, protecting your assets and allowing them to grow. This is an enormous win in the field of personal finance. All these skills scale and the more you practice them, the easier and more beneficial they become.

Starting today, you are building a pool of wealth for yourself and your future. It is mid-April and I challenge you to fill this pond by the end of 2026. I am sure you already have a start and are willing to apply any windfalls to the cause. The proposed short timeline for this exercise will create impact you can feel and see as well as psychological motivation. Many investment timelines span decades. This is why compound interest is so impressive. Investing is great but it has challenges that make this a logical first step.

Building a sizable savings account by the end of the year will make you feel like a champ! You can chart the growth of your savings from month to month, and see immediate improvement. Every month has a small wins to celebrate. At the end of 2026, you will have tens of thousands of dollars in savings. You will feel different because you will be a different person, a person with skills, a person with money, a person with options.

If an opportunity or necessity arises, you have funds. I suggest, however, that you hesitate to jump on any opportunities if you are only just building up your savings. That is like an egg trying to fly and you all know that outcome. Investing without having credible savings jeopardizes both the likelihood of success with investing and your own personal household economics. If nothing comes up, you still have the funds. The idea is to always have the funds. Many of us, are taught to fear that if we don't spend our money, it will become worthless over time.

General advice even holds that saving money is equivalent to throwing it away because of the compound factors of inflation in prices and inflation in money supply. Thus, if you aren't savvy about personal finance, you may end up thinking, "I had better trade this money for 'something' before its value erodes." This keeps us in the Average buy-work-spend-debt trap. If you are a bit above average, you realize that even if today's dollar is worth only ninety-eight cents tomorrow, you still have almost a dollar that the average person does not. In truth, there is a point at which you should spend your money. That is when you own your own business but that is a different topic.

I personally spend thirty thousand dollars per year so that is my savings target. Remember, this is after almost twenty years of mistakes and refining my approach to personal finance. I currently have ten thousand dollars in savings. As an accountability exercise, I will post my progress every month so we can improve together.

Twenty-Twenty Six Savings Challenge -April

Present Value: $10,000 Future Value: $30,000

Room for Growth: $20,000

Monthly Contribution: $4,000 Countdown: 7 months

Next week, we will talk about how to build your second pond, above the first but don't let that distract you from this first and most important goal.

The one thing to remember is... get busy little beaver! The world is waking up to the benefits of beaver dams on rivers after pushing the species to the brink of extinction. Beaver dams create ecosystems, cool rivers and provide a depth and richness to the landscape that would not be there without them. Wake yourself up to the benefits of pooling your money into savings and stop letting it all rolll away from you. You are dedicated and industrious and I know you can do it.