It’s scary how many people I know that have $1,000 or less in their savings account.
When anything unexpected happens, they go scrambling for extra cash and can fall into the traps laid out for those who live paycheck-to-paycheck. Those include using credit cards to bridge the income gap and using cash advance companies to provide “fake” income.
Neither option is good if you want to improve your financial health, so it’s clear that increasing the size of your savings fund is a better long-term solution.
If you’re still skeptical, and many who like to “live in the moment” or “can’t afford to save” still are, consider some of these other reasons for having a healthy cash stash:
- You can opt for the better-value purchase or repair, even when it’s more expensive.
- A friend or relative might pass away or fall ill unexpectedly, requiring immediate travel.
- You can experience the rush of paying for something you really want with cash, and having no second thoughts or regrets about it.
- You don’t have to panic when your boss forgets to hand out the paychecks.
- Good opportunities are never expected, rarely last long, and usually require some cash to pursue.
- Having cash keeps you out of debt when you need to buy something or deal with a problem immediately.
- Money can be traded back for time, like an extended leave from work, a career change, or a return to school.
- Large purchases like cars, homes, and even new rental apartments usually require a hefty up-front cash payment.
- A large savings account is often a “gateway drug” to other good money habits, like looking into personal pension plans and paying off debt.
- You never know when you might lose your job.
- You can’t pay for everything with a credit card when you get into a jam; some things still require cash.
- You don’t have to become part of the “statistic,” the group of people that routinely spend more than they earn.
- The discipline you build by learning to save can help you grow in other areas of life.
- Money you have today is always better than money you could possibly earn tomorrow.
- When you save up enough money to retire, you can retire. Fascinating, and the choice on timing is yours alone.
- Starting a new business becomes a time of excitement and focus, not of stress about finding money.
- Getting married is expensive.
- So is having kids.
- Unexpected bills, or those that only come around once in a while will never be a problem again.
- You can choose to self-insure when possible, or increase your deductible amounts to lower your ongoing costs.
- Not having money forces you to take the cheapest approach or do nothing. Having money gives you options and freedom.
- Many people love to travel, and travel requires substantial amounts of money.
- It’s amazing how the stress and worry about money melts away when you have the means to deal with unexpected problems.
- By modeling the skill of saving money, you can teach your children to do the same.
- While the government safety net is a nice Plan B, you shouldn’t rely on Social Security or Unemployment Insurance to be there in your time of need.
- Savings let you buy things that would otherwise be unreachable with the amount of money you make every month.
Is there another compelling reason that you use to motivate yourself to save? I’d love to hear from you in the comments.