BROTHERS DICK AND Mac McDonald opened up a drive-in restaurant in the 1940s modelled after a hot dog stand they frequented in San Bernardino, CA.
By the late 1940s they decided to reorganise the business to take advantage of some lessons learned and the changing dynamics in America. The McDonald brothers recognised the burgeoning middle class following World War Two was moving to the suburbs and feeling more rushed than ever because of their commutes and growing families. People wanted their food faster, so the brothers mechanised the food prep process by turning their kitchen into an assembly line and focusing exclusively on burgers, fries and shakes. This was the invention of fast food and a little restaurant you may have heard of called McDonald’s.
Ray Kroc was a milkshake machine salesman who saw potential in the business model, eventually manoeuvring his way into a job as the restaurant’s franchise agent in 1954 to expand their reach. The McDonald brothers were not in the empire building business, but Kroc was, so he eventually bought them out and helped turn McDonald’s into one of the most well-known brands on the planet.
Many years later, Kroc was asked why he partnered with and then bought out the McDonald brothers when he could have simply copied the system they created. Part of it was the fact that it was by far the best operation Kroc had ever seen of the thousands of kitchens he’d frequented over the years as an appliance salesman. But it was also the name itself that mattered. McDonald’s sounded right to him, while a chain named Kroc’s didn’t have the same appeal.
The connotations we place on certain words can change how people feel about them, just like McDonald’s versus Kroc’s. The Big Mac rolls off the tongue a little easier than the Big Kroc.
Saving money is like the Kroc’s of personal finance.
So many experts invoke terms like ‘frugality’ and ‘delayed gratification’ when explaining the merits of saving. Frugal is just another word for cheap and no one wants to be labelled a cheapskate. And delaying gratification sounds awful when you can simply take your gratification now.
Saving needs to hire a new advertising firm.
Here’s how Don Draper might market the idea of saving money:
It buys you time. Time is the most valuable resource on the planet and the only asset where there is no inequality. We all have a finite amount of time in any given day to work with. Saving money can give you more control over how you spend your time in the future. Time to spend doing what you love. Time with your family and friends. Time spent travelling to exciting destinations. Time not spent going to the office anymore.
Saving allows you to do what you want in the future without having to worry as much about the financial aspects of your decisions. Saving more now means replacing less of your current income when you finally become financially independent. A higher savings rate automatically means a lower spending rate. They go hand-in-hand. Saving is your front-row ticket to financial freedom.
Saving not only frees your time in the future but also gives you a buffer in the present. Saving money provides a margin of safety when life inevitably gets in the way of your best-laid plans. Life is stressful enough on its own, but adding financial problems can amplify the rough patches. The last thing you want to worry about when life throws you a curveball is money. Money issues amplify stressful situations.
The problem is most people don’t dig deep enough when figuring out why they should save in the first place. Getting rich sounds like a reasonable answer, but living a rich life means different things to different people. A specific number doesn’t make you rich. If you’re constantly stressed out about money, it doesn’t matter how much you have – you aren’t rich if money still makes you worry.
Saving for life beyond work sounds impossible to some and too far off in the future for others. If you think about your savings in terms of buying units of time or freedom as opposed to units of money, it can help frame the decision into the proper context. Most people want to get rich but we would all be better off trying to not die poor, or better yet, defining what being rich means on our own terms.
Don’t worry if you haven’t got started yet. All it takes is some small wins to get the ball rolling.