So often articles are written with an attitude of scolding us into saving more money – or trying to motivate us into saving some of our money by creating a fear of the future without money. Maybe we should first ask ourselves, “why save money?” There are two broad reasons to save money:
1) Emergency situations – good or bad. Given the unknowns in life, it makes sense to have saved some money to deal with unpredictable events. An example of a “bad” emergency could be a critical surgery, such as needing an appendix out. While on the “good” side of an emergency, you might find an item you have always wanted at a price that begs you to purchase it – such as a pair of shoes or a classic car you have always dreamed of owning. One thing is certain, as we live our lives, stuff happens – and life can be a little smoother if we prepare for the unknown; both good and bad.
2) Retirement. Assuming we live to a normal age before death, we will at some point retire from the active employment work force. When we retire, we will still want to eat, have shelter, be warm in the winter and cool in the summer, travel and the list can go on and on. We anticipate using our time on activities and things that are often crowded out by our efforts devoted to earning a living. While you can argue that you won’t spend as much money in your retirement years; you will still need money.
You may think of other reasons to save some of your money or even reasons to not save your money. The wonderful part of savings is that it is your choice, your life.
A few facts regarding saving money* that may be of interest to you:
In North America, Mexico leads with the highest savings rate of 20.6%, while in Europe, France has the highest savings rate of 14.47%.
One final thought about saving money – the sooner you start and the more consistent you are at saving money, the lower the percent you will have to save to meet your financial needs in the future.
Next month we will address ways to find money to save within your budget.
Thank you for the opportunity to work with you!