If you’re in financial survival mode and can’t seem to save a penny for “a rainy day”, you’re not alone. It seems futile to bother even to save when you’re staring at credit card statements that have sky-high interest rates.
The thought you should put money aside each month just feels overwhelming.
It’s not that you don’t want to save, you just don’t know where to begin and how to move past the feelings of discouragement you have about saving.
How do you learn to love saving money?
The Joy of Saving
Learning to save money is crucial to getting out of survival mode. It’s what helps you to begin to break the cycle of debt because you now have a savings account from which to handle emergency situations.
But truth be told, most of us were not taught the value in saving. We might have been told to save, but not given the guidance or direction to understand its value.
What The Past Reveals
You probably have some early memories of saving money. Maybe you had a piggy bank that your mom or dad “borrowed” from only to never repay you. Maybe you invested some money only in seeing the fees you were being charged were more than what you were making on your investments. Either way, you may have adopted the “why to bother” attitude to saving money.
While it would be nice to review all the memories that stood in the way of learning to save adequately, we must get to a place where we are ready to let go of our old beliefs as being impossible, worthless or vague; and instead, begin to embrace the joy of saving.
In my article The 6 Steps To Saving As A Means of Getting Out Of Debt, I highlight the method one should use to begin to save and why saving your way out of debt is a smart choice for most people.
Getting out of debt and saving go hand in hand. You can’t do one without the other. Not having a savings account is the number one reason people get into debt and stay there. They don’t have the available resources to handle whatever life may throw their way.
Many people have this belief that you should never touch your savings account, and if you do and you end up depleting it to pay for an emergency situation you’re a big, fat, failure.
The problem with this thinking is believing there’s only one way to save.
[tweetthis]There are different types of savings depending on what your intention is for the money. [/tweetthis]
We should have to have three types of savings: short-term emergency fund, long-term emergency savings, and investments.
1. Short Term Emergency Funds
The most significant resource you can establish if you want to break out of the debt cycle. This fund is for non-monthly, periodic expenses that come up as your car needs a repair or the water heater blows. These types of life circumstances are bound to happen, and when you can go to your short-term emergency fund to cover the expense instead of using a credit card to pay for it, you’re breaking the debt cycle.
But periodic savings aren’t always about saving for something ho-hum. This account can be used to save up for a vacation, a new mattress, Christmas gifts; anything that’s not part of your regular monthly expenditures.
You include a certain amount into your spending plan each month and deposit the money into your account. This money is to be used guilt-free as it intended purpose is to help you avoid credit card debt and save for the things you want.
2. Long Term Emergency Savings
If the economic and housing crisis of 2008 taught us nothing else, it’s that every American needs a long-term emergency savings fund. If the countless people who lost their homes and jobs had a safety net such as this, they might have fared better.
This fund is to be used and only used when there is a loss of income. It can be due to job loss or illness or a reduction in work hours or loss of business income. It is never to be used for any other reason. This is the fund between you and being homeless.
I didn’t have this fund when I lost my job in 2002. My cleaning business was an overnight success and as such I made the money to keep me from losing my home. But if it hadn’t been for my luck, things would have turned out far differently.
The exact amount you should save into this fund will depend on a variety of factors. Some financial folks like Dave Ramsey say you should save a minimum of three to six months of expenses. Personally, if we were to have a repeat of the financial crisis of 2008, that wouldn’t be enough for most people.
Investments are an important part of your overall financial picture. But if you’re only putting money into investments (which is what I did), then if you find yourself unemployed or fall ill, you’ll be in big trouble.
With that being said, no one wants to get to the end of their life and have to eat tuna every day because they can’t afford to live comfortably.
Recently I received a message from a woman asking for specific advice for seniors who need to get out of debt. She’s 67 and can’t even think about retiring. I’m hoping she’s got something saved for retirement.
Don’t end up this way. Start saving your way out of debt, build your emergency and long-term savings and fund your retirement. Work out the details in your spending plan.
It may mean making some significant sacrifices to accomplish this task, but the alternative will be far worse for you and your family.
By focusing on your savings strategy, you’ll eventually find the joy in saving.