How ‘Spaving’ Could Cost You Thousands in Retirement Savings
Written by
Heather Altamirano
Edited by
Rebekah Evans
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Spaving — the act of spending money to save money — might seem beneficial to your wallet, but according to experts, the strategy can set you back in retirement.
“The reality is you’re spending more money and diminishing long-term savings,” explained Geri Hopkins, chief operations officer at Skyla Federal Credit Union. “The money spent on these so-called deals could be more effectively invested in a high-yield savings account.”
Spaving usually isn’t a one-time event, so if it becomes a regular habit, people could miss out on thousands of dollars for retirement. Here’s everything you need to know about spaving and why it could cost you big time.
What Is Spaving
Spaving is chasing deals that look like bargains but, in the long run, aren’t.
“When you spave, you are trying to spend a little more than you planned in order to qualify for some type of promotion like saving an extra 5%, free shipping or to get a buy one get one free deal,” said Eric Mangold, certified wealth strategist (CWS) and founder of Argosy Wealth Management.
Before shelling out any money, do the math to ensure you are actually saving instead of falling into a financial trap.
Why Spaving Feels Smart in the Moment
It feels good to get a so-called deal and save money, but with spaving it’s often an illusion-you aren’t saving.
“Retailers buy more, save more marketing approach seemingly gives shoppers a dopamine hit, making the purchase feel rewarding or like a smart financial move,” Hopkins said.
However, instead of helping consumers save, it’s actually causing them to spend more, which means less money for long-term goals like retirement.
“You don’t pause long enough to think, I should be saving this money for my retirement or even for the mortgage,” said Mary Clements Evans, author of “Emotionally Invested: Outsmart Your Anxiety for Fearless Retirement Planning,” founder and president of Evans Wealth Strategies.
How Spaving Can Destroy Your Financial Future
Hunting for discounts is a smart way to save money, but only if it’s the right deals.
“Every dollar you spend chasing discounts is a dollar that could’ve been invested and compounding growth,” said Danny Ray, founder of PinnacleQuote, a life insurance company.
He explained that if you’re spending an extra $100 a month “to save” that could cost you over $150,000 in lost growth over 30 years if invested at a modest 7% return.
“Over time, those buy-one-get-one deals or free shipping thresholds quietly chip away at your long-term goals, especially retirement savings,” Ray added.
“[Spaving] gets the brain to change the decision to purchase away from the thought that they’re being bad by spending into the thought that they’re being smart because they’re saving,” Evans explained.
It’s a retail trick that works.
How Much Spaving Could Impact Retirement
The more you spave, the more it will cost you and affect your retirement. The exact amount depends on how much you go over your budget, but it could be substantial.
“Retirement is a goal that requires consistent saving over the course of decades,” Evans said. “One missed month can easily lead to two months, then two years and so on.”
If this happens regularly, you could work for more years than you planned.
Tips for Avoiding Spaving
Changing your mindset and money habits is not easy, but there are tips to avoid impulse purchases and spaving.
“The best way to avoid spaving is to shop with intention,” Ray said.
He also noted it’s wise to automate your savings every month because if you pay yourself first, you’re less likely to fall into shopping schemes.
Evans shared other clever tactics to outsmart retailers’ spaving tricks including the following:
- If you weren’t going to buy it, you’re not saving — you’re spending.
- Spaving often leads to impulse purchases, which can derail your financial goals.
- The short-term satisfaction of “saving” can mask the long-term impact on your budget.
A nice nest egg for retirement doesn’t come from short-term discounts designed to make you spend more. It comes from consistent saving and investing wisely. “[And] resisting the urge to trade today’s impulse for tomorrow’s comfort,” Ray said.
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