Saving Money Needs to Make a Comeback
Whatever happened to saving your money? What ever happened to living within your means? Nowadays, consumerism really has taken over and done a number on many families. It is no secret that the economy isn’t so great right now for many people. That’s why I believe that saving money need to make a comeback.
Ok, so don’t look at me like I have tentacles coming out of the side of my head (now that’s a visual). Let me explain the how and the why.
Pay yourself, not just your debtors. I find that a lot of people get their paychecks, cash the entire thing and don’t even want to put the spare change into their savings account. When you have the cash in hand, you will spend it. If it is difficult for you do this on your own due to financial discipline, get a deduction automatically set up to go to a savings account with minimal access to you. If it is hard to get to, the normal reaction would hopefully be to do without or find another asset source for money. Touching the savings account should be a last resort and something that you have to think about, which slows you down.
You should be putting away money for a rainy day especially in these uncertain times with gas and food prices on the rise. No job is secure, no matter what you are told. Eventually, if not already, you ideally should have about 6-9 months of your salary saved in liquid or semi liquid products to offset the likelihood of having immediate trouble if you were to be out of work due to an injury/long term for you or a family member. Also, in the case that you were laid off or lost your job, you could buy a little bit of time trying to find another job without a severe financial interruption.
Keeping cash available can protect your credit indirectly. You learn to live on less than what you actually make. If you are not spending your entire disposable income on expenses and saving some of it, that means that you are living within your means and budgeting your personal finances. Taking this approach will force you to pay all your bills (hopefully on-time) and still help build your financial security because of the discipline that is required to save.
Having higher cash balances will also reduce the likelihood of getting fees on your bank accounts as well because of the law of averages. If you are carrying a higher balance, it should be difficult for you to be charged a fee due to insufficient funds, overdrafts, minimum balance requirements, etc.On a final note, my Dad told me a few years ago: “You can’t be an investor if you don’t save anything.” That stuck with me and that is one of my mantras that I try to share with the people I interact with in my everyday experiences.
Excellent piece!!
a little while ago I took out a bank loan to work on a project. The loan was big for me. Small for other people. About $5K. The terms of repayment involved a payroll deduction. Imagine my surprise when after only a little while I looked at the loan again and I had already repaid nearly 2,000!
I have an automatic savings plan set up to try to save a little for a rainy day. The only sad thing is the biweekly contributions are a lot less than my loan repayment amount.
I’m glad to hear that these techniques are not totally unknown to folks. I think it’s very good in this day and age of immediate availability, quick access to cash, & instant debits to have some good financial habits that are easy to do through automation. Debt management can be tedious, but if you can set it and forget it…why not.
Don’t be frustrated if you can’t save everything because you have loans…At least you are saving something. The way to try to help your savings cause is to try to analyze your weekly spending and try to save there. The less you spend, the more you will have extra which you can sweep to savings. You would be surprised.
i really need to start up back on my own savings myself! having nothing to fall back on is kinda scary.
hey Aurie
you’ve dropped out of sight
what’s new in finance?
I know I know. I’m going to post shortly.
It really is too bad. The sad thing is that it seems to me that those who aren’t saving the most are usually the ones that should be saving the most.
I’ll be looking forward to getting to know you better through your blog Aurie.
Great article, speaks to something I deffinately need to do more of. The recent illness of my mother and the associated costs was a stark reminder of the ever important need to save.
I agree Theresa that we can never know what unforeseen circumstances can arise. There is no easy way to save, but it just has to become a part of your fiber/makeup. Slow and steady will win the race, even with setbacks. I pray that all is well with your Mom now. God bless.