Are you really saving money? Probably not. People like to tell themselves stories to feel good and “I’m saving money” is one of them. But most of the time people are just spending less on one item, in order to be able to spend more on another. The money, in other words, is still leaving your bank account.

Now, there’s nothing wrong with spending. Spending is great! There’s so many pretty things to buy, after all, and no one’s saying that you shouldn’t spend.  Just don’t trick yourself into thinking that you’re saving.

Let’s examine some common savings myths:

I’m living at home to save money for a down payment

Are you just living at home and not spending money on rent but then balling out around town? Or are you actually putting away a certain percentage of your income every month to reach a down payment savings goal? Most people who live at home, from what I’ve seen, just have more money to spend on other things.

I saved money by buying a t-shirt on sale

Did you put away the difference between the retail and sale price in the bank? Or did you fritter away the few dollars on another purchase? I bet it’s the former. Imagine what would happen if we took all those little savings we got from price-matching and clearance sales and put it in a bank account: it could add up to hundreds over time, and then be compounded even further in the stock market.

I saved money all year to go on vacation

Nothing wrong with this, but you didn’t actually save money. You put money into a spending account. Then you spent the money.

So what counts as actually saving money?

To actually save money, the money needs to remain in your bank account and contribute to your net worth. It can live under your mattress, earn interest in a bank account, earn dividends or appreciate in some way.

What are some of the way’s you’ve confounded spending and saving?

For more of my work attempting to increase precision in the language we use around money, checkout “Why it’s not an investment, it’s just an expensive pair of shoes”