Most people recognize the importance of saving money, but actually putting those pennies away can be a challenge. It’s a concern that impacts all but the extremely wealthy. For generations, well-known people have provided advice about money and its value.
Ben Franklin once wrote, “A penny saved is a penny earned.” He also said, “If you would be wealthy, think of saving as well as getting.”
Kin Hubbard, a cartoonist and journalist in the late 19th and early 20th centuries, explained, "The safest way to double your money is to fold it over and put it in your pocket."
The late actor and comedian Bob Hope once said, "A bank is a place that will lend you money if you can prove that you don't need it."
The Beatles taught us, “I don't care too much for money, for money can't buy me love." Of course, the Beatles had money, so the band’s advice was really hypothetical.
Prior to the economic downturn in 2008, the U.S. monthly personal savings rate was running at less than 3 percent, according to data from the Federal Reserve Bank of St. Louis. Immediately after the downturn, the rate rose to 8 percent. Since 2013, the rate has generally been about 5 percent.
Here are some reasons everyone should regularly be putting aside some money.
They always seem to happen at the worst time, financially. “A family member can develop a health issue, you might need to make an emergency trip, you may have a car accident or breakdown, severe weather could flood your basement or crack your pipes, or you may have to fly to a loved one’s funeral,” notes mymoneycoach.ca. If you don’t have some money set aside, you might be forced to take on debt you can’t afford.
The Social Security program was designed to provide about one-third of an individual’s retirement income needs, yet according to information from the Social Security Administration, 34 percent of the workforce has no retirement savings. Whether it is a long way off or just around the corner, putting money away for retirement is essential.
Home and real estate
If you want to buy a home or some other real estate property, you’ll almost always need a cash down payment. Depending on price, income, type of property, lender, etc., the down payment can be anywhere from three percent up to 20 percent. For most of us, old-fashioned saving is about the only option for accumulating that kind of nest egg.
So you can live your dream
“If you want to climb a mountain or start up your own business without taking out a loan, making regular savings over a period of time will support you in achieving those goals,” explains ecothriftyliving.com. If your dream is a nice vacation cruise, you might be able to sock away the money you need in a few months. To buy a cabin in the mountains, you might have to save for many years.
It costs less
For most people, the alternative to saving money is to take on debt. Mymoneycoach.ca estimates that if you normally charge all of your purchases on your credit card but don’t pay off your credit cards in full every month, you are probably paying at least 50 percent more for everything you buy because of added interest charges.
You have extra money
The decline in gas prices means most people have extra money they were not counting on a year or two ago. “If you average 200 miles a week and get 25 miles to the gallon, that should save you more than $450 over the course of the year,” notes money-rates.com. “However, those savings at the pump only really count if people transfer them from their wallets to their savings accounts.” Of course, many people drive more and have multiple vehicles so the savings are greater. Instead of going out to eat more often, put that extra money aside.
Securing your finances frees up your time to enjoy life. Like Christopher Rice said, “Every day is a bank account, and time is our currency. No one is rich, no one is poor, we’ve got 24 hours each.”