The importance of savings

Save, Save. Don’t Splurge on a Piggy Bank, a Tin Can Will Do

Save, Save. Don’t Splurge on a Piggy Bank, a Tin Can Will Do.
By SHIRA BOSS
Published: September 1, 2007
Saving money may not be the sexiest financial move, but it’s probably the most important.

Excerpt:

Saving money is not the sexiest financial move, but it’s probably the most important. So start squirreling. Even if it’s the change from your pocket. Start incubating a nest egg, which is not just for retirement. A cash account may be for a flatter television set, a vacation, new clothes, a period of unemployment, a down payment on a house, car repairs or whatever treat you can dream up.

I know, times are tight and 7 out of 10 Americans report living paycheck to paycheck, meaning there never seems to be enough left over for savings. In 1985, Americans were saving $11 for every $100 they brought home; now the savings rate is around zero, and debt is at a record high.

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It is a widespread and harmful myth that one needs to make more money to save some of it. “We’ve met people who can save on a salary of $30,000, and people who have not a penny in savings and a salary of over $300,000,” said Manisha Thakor, co-author of “On My Own Two Feet,” a personal finance primer for women. “Saving is about a mind-set and a commitment, not a level of salary.”

When I was most stressed financially, I forced myself to put 5 percent of every check into an emergency account. It built up surprisingly quickly and ended up paying for surprise expenses that otherwise would have gone on a credit card. Now I’ve worked up to putting some cash from every paycheck into envelopes marked Goody Bag, which I dip into for luxuries like a nice teapot. That definitely makes earning money — and spending it — more fun.

“The powerful thing is that saving is not about deprivation, saving is actually all about spending,” Ms. Thakor said.


Comments: I thank my wife for having us on a conservative fiscal policy for the 33 years (will be 33 years in December) of our marriage. Interent banks have automatic savings plans (eg. ING Direct).