Get Past Your Bad Excuses For Not Saving Money
We’d all like to save more money and we feel bad for not saving. But there are house payments due, bills coming in, the kids need things — the list is endless.
Yet you know that if you don’t save there is no financial future, and never mind the headaches of a short-term cash emergency. Here’s how to get past the bad excuses we make for not saving money and started on build a better long-term financial picture for you and your loved ones.
Excuse No. 1: “I am barely getting by. How on earth do I save more money?”
Don’t fool yourself. You’re getting by better than 75% of people in the world. What you haven’t identified yet is what your minimums are to “get by.” Forming a budget is a good first step to figuring that out. A budget will help you to identify the absolute necessities, and also those things you can probably live without. Need an example? How much are you spending on cable TV?
Excuse No. 2: “Aren’t my current debts or student loans more important?”
I’ve always taken the stance that your education can’t be repossessed. Indeed, I’ve never seen Dog the Bounty Hunter out to take diplomas off the wall of those that haven’t paid their student loans off. I do feel that eliminating unsecured high interest debt such as credit card debt is important. Unsecured debt can hinder your credit report very quickly and these debts are generally for things we didn’t really need in the first place.
Excuse No. 3: “I think getting a house should be my first goal.”
Owning a house is a great goal, but trying to save only for that without covering the other bases is like building that house with no foundation. It will look good — until the first big storm comes up. Slow and steady with intermediate steps wins the race here. I’d first save enough for a small emergency fund, pay off any unsecured debt and start contributing to my employer’s retirement plan. If you have extra, then put some toward a house. Always remember, if you have food, clothing and basic shelter you’re doing better than a lot of people in the world.
Excuse No. 4: “Banks pay no interest. I’d rather spend than save, since rates are low.”
That’s fine, but I hope you spend your money on things that can immediately be sold for a higher value the instant you need money! Plenty of those liquid appreciating assets that can be sold with a minimal of fuss out there, right? Banks aren’t the only place to save money. They are great for short term, low-risk savings with the understanding that because our risk is low, so are the returns. However, consider longer term savings ideas like a 401(k) plan. Money here is meant for the long term, but one can usually take additional risk and generally capture a higher return.
Excuse No. 5: “If I have some kind of cash emergency, I can always borrow it, right?”
Is this a chance you really want to take? Indeed, in most emergencies, we need the cash now, not after having to jump through whatever hoops we need to get a loan. Additionally, the decision on if you get that loan is out of your hands and in the hands of a banker or loan committee who may not be willing to provide the funds. Having cash on hands usually gives people the peace of mind to know that they can face most cash emergencies head on, and then replenish the cash savings when things aren’t as urgent.