Why Save??
By Patricia Davis
Many people have wondered why they should “save for a rainy day” since tomorrow is not promised to them. I remind them that, if they’re lucky, tomorrow indeed will come and you want to be ready when it does.
I believe there are at least four strong reasons why everyone, regardless of their financial situation, should either begin saving a portion of their income immediately, or set a date certain when they will begin a serious savings campaign, and immediately create a spending plan that gets them to that goal. My four major reasons to begin a long-term savings program are:
Unexpected expenses. Research has shown that 46 % of the US population (with incomes above the poverty line) could not come up with $400 to cover an unexpected expense. No matter how well you plan your expenses, there is always the possibility that either you overlooked something, or, more likely, something completely unforeseeable occurs (e.g., a major car repair, an unexpected tax bill, your child needs braces, or large medical bills, or sudden job loss) and you do not have the funds to cover that expense. For emergencies, many financial experts recommend that you have enough savings to cover six to eight months of living expenses.
Planned expenses. Let’s face it, we all want to have nice things or do fun things in our lives and most often those things cost money. A birthday party, a vacation trip, or even dinner out at a nice restaurant are fun treats to break the monotony of daily life. Having savings in the bank for just such situations means you don’t have to do without or go into debt to finance those activities.
Post-high-school education expenses. Research has shown that fewer and fewer new jobs can be filled by people with high school diplomas. In the coming years, your children will need to have at least some education beyond high school, if not a college degree, in order to be competitive in the job market. Parents should be prepared to pay at least a portion of those expenses in order to spare their children the burden of high levels of student loan debt, which could limit their future options.
Retirement. After working 30, 40 or 50 years, most of us look forward to a long retirement doing the fun things we like but may not have had time to do during our working life. Funding those activities (fishing, golfing, traveling, etc.) while covering everyday bills during retirement is a challenge we all must face. Social Security is generally not sufficient to cover 100% of retirement expenses and pension retirement sources may not be available. So, saving in the form of a 401K, IRA, or other regular savings may be the only remaining option.
In addition to the above, saving money is a good way to take care of yourself, is good financial discipline and is the best way to get ahead. You can start saving a small amount that increases as you get salary increases, gifts, tax refunds, etc. You’d be amazed at how quickly even small savings add up.
Did you realize if you save the cost of a soft drink per day (@$1), at the end of the first year, you would have saved over $350? At the end of 10 years, you would have saved over $3,500. Plus, apart from your fiscal health, giving up those extra calories might prove to be good for your physical health as well.
So, make 2024 a year in which you pledge to do yourself and your family a favor—start betting on tomorrow and start saving your way to a happy, comfortable independent life.
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