INDIANAPOLIS — Have you heard some sayings related to your money and wondered what they really mean? Andy Mattingly with FORUM Credit Union gave us the key to understanding what they really mean and how you can implement the real strategies tied to them.

A penny saved is a penny earned?

This is one of the most misunderstood sayings going. Most people believe this is about a focus on putting money in savings when in fact, it is really about spending. For every penny saved by using coupons, discounts, or buying on sale we make our money go farther because we can buy more with each dollar. If you save money by spending less on what you buy, you are in fact able to buy more with the same amount of money. For your financial situation, it is like earning more without getting a raise. Perhaps it should really be a penny saved gives you more pennies to spend and we would all understand that better.

Another interesting one is about not putting all your financial eggs in one basket?

It is always interesting that these sayings often don’t seem related to money matters, yet this one is really honed in on the concept of diversification. When you have investments such as your 401k or other retirement savings it is really important to have different types of investments with different risk profiles. Usually, if one type of investment is doing poorly another may be doing better. Just like if you were carrying eggs in multiple bags, if you drop one and smash all the eggs at least the eggs in the other bags would still be fine and you probably can probably still have eggs and bacon on Race Day morning without having to visit the store again.

One of the most quoted is pay yourself first

Pay yourself first has to be the most quoted financial saying and the one that is the least followed. It starts with the fact that paying yourself first is focused on how much you save for retirement, fun money, big expenses and the emergency fund. For most people, following this advice requires setting up automatic transfers to all of these savings accounts and then using the remainder to pay bills and for discretionary spending. Where most go wrong in following this important advice is that they only save what they have left over after paying bills and spending for the month. Rarely does this ever leave any funds for savings. When you save, you are paying yourself for future income and building for future expenses that are important to you.

What about keeping up with the Joneses?

One that most people would really benefit from is not keeping up with your neighbors, too often people believe they have to make certain financial decisions because that is what people in their circle are doing. The problem is we never really know what the financial situation is of someone else and just because they can do something doesn’t mean that we can or should. This is really how people live beyond their means which leads me to the other important saying to follow, don’t live beyond your means. This is especially true because so many have the ability to sign up for a host of money services or incur large amounts of debt to fund a lifestyle that isn’t based on our income. This is how people get into financial trouble, putting so much on the buy now and pay later program that eventually their income doesn’t support their lifestyle.