Basic Financial Fitness: Why Savings Matter
I was involved in a conversation recently that got me thinking about money and saving.
It all started with the question: Could you come up with $1000, right now, if you needed to? This isn't even the first time I've heard this question, as my dad and I had a similar discussion about a year ago. If you were asked this question, what would be your answer? If the answer is no, you should probably begin taking steps to remedy that. But, "Why?" you may ask. Well, the answer is simple: saving is important.
If you read through news websites as much as I do, then you see what I see. There is a steady flow of articles out there about how to save money. Many articles just regurgitate the same information over and over again to a small minority of people; many others are targeted to people who are looking towards the future (i.e. retirement); and then there are some that give people easy, small ways to save money. I fall into the last two categories, but it's the very last one I'd like to focus on today.
There was a time in my life that I thought I'd never be able to save money.
Actually, I was fiscally challenged, but I've grown and changed a lot since those days. I realize now that everyone can save. It may not be very much, but if you're persistent and consistent, it will pay off in the long run. What exactly do I mean by that? Well, say you're a broke college student, working a part-time job to help you get by. You think there's no way you could save money...but you're wrong. Take $1 (yes, $1) out of every paycheck and put it away. When you have some extra, put a little more in, and when you get a monetary gift from someone (think Grandma at Christmas), put some of that in there.
I'm sure you're thinking, "That's not going to build any real savings?" Well, you're wrong for two reasons:
1. If you're that college student, and you put aside $1 from each paycheck, and you got paid every two weeks, you'd have $96 dollars after four years. If you added Grandma's $5 every Christmas, you'd have an additional $20, and if you were able to save an additional $25 over the years, you'd have a total of $141 after graduating.
2. $141 isn't very much in the scheme of things, but, still, you've saved $141 dollars with no effort, and you've gotten so used to that $1 investment that it doesn't affect your life in any real way. You are still young, and, now, you are used to saving. It might not be much, but you've created a good habit. Now that you've got a degree, you can go out, get a career, and start habitually saving more money.
You don't even have to be young, nor a college student, to start saving. If you can, save $5 a paycheck, but save something. It's never too late to start, so don't delay.
But, why is saving so important?
The reasons for that are many, but include the following:
*What if you find yourself unemployed for several months (or even one month)? How will you get by? How will you pay the electric bill, buy food, or make rent?
*What if your car breaks down, and you are either faced with a hefty car repair bill, or need to replace the car altogether? How will you come up with the money?
*You're still a few decades away from retiring, but how do you want to spend your retirement? Do you want to sit around your house just getting by? Or are you planning on doing some traveling? Will you be able to afford to retire?
There are plenty of other reasons for saving money, but those are some of the big ones. Most of us don't think about future scenarios when we think about saving. Many people think they have plenty of time, or don't really worry about money until they're in a crisis situation. Neither of those are productive nor responsible thoughts.
Now, I'm not saying that putting away $5 a week is going to solve all your problems, but it's money you'll never miss. If you save it and forget it, your persistent dedication will add up. If you saved just $5 a week for 20 years, you'd have $5200. That's a nice little chunk of change for saving no more than the price of a value menu meal at a fast food restaurant every week. Most people, myself included, will frivolously spend $5 every week on something, so why not invest it in yourself?
If you'd like to start saving money in small ways, here are some links: (These aren't endorsed by me, per se, but there are some good tips, hints, and strategies in these, so pick and choose ideas that work for you...and start putting away $5 a week.)