The 3 reasons to save money is for your freedom, family, and security. Too many people live in a spending mindset without thinking about the long term consequences of those choices. Having peace of mind is priceless and worth more than any amount of money.
I’ve seen it over and over again. As soon as people have money, their first thought isn’t to invest and protect their financial future. Their first thought is what they can buy with that money. So they log onto Amazon and buy to their heart’s content and desire.
Then when they find out that employment isn’t permanent, they regret all of their choices. That’s the cycle of excessive consumerism that we’re so used to seeing. America has a spending culture where you’re supposed to do something with the cash that you have.
Many people think, “what’s the point of having money if you’re not going to use it?”. That’s a dangerous mindset that’s pervasive in almost every culture. Even in a high savings culture such as China, where their savings rate is at 45%.
However, what the media reports leave out is that their real estate is overvalued to their necks. The home price to income ratio in China reaches anywhere between 20 – 35x as compared to 4.7x in the United States. If people have money, they will spend it in other areas.
When a bad situation such as a bear market of 2022 happens, they are left wondering what they could’ve done differently.
3 Reasons to Save Money
Money isn’t something to be taken lightly. Although money isn’t everything, it still has a tremendous impact on our lives. There are many reasons to save money so that you can lead a better life for you and your family.
The reasons are as below. It’s not a good idea to put your family’s future in jeopardy.
1) Save Money for Freedom
Many people don’t understand the role money plays in our independence. When we’re young, we’re not independent. We are absolutely dependent on the money that our parents pay us by housing us, feeding us, and the like. Therefore, we have no choice but to play on their turf.
We couldn’t even go to a restaurant by ourselves without our parents driving us to those places. One of the 3 reasons to save money is for freedom. There’s a reason why it’s called financial independence. We can’t do anything in life without money, whether we like it or not.
There’s a reason why companies love to hire MBA graduates with a family and six figures worth of student loan debt. You can’t lash out at your employer, no matter how badly they’re treating you. What are you going to do if they just let you go right then and there?
You can’t discharge student loans in bankruptcy. Without a solid financially independent footing, you are chained to the shackles of your employer. They hold all the power over you. You can’t say no to them because they can make your life downright miserable if you do.
Saving money is the bare minimum that you need to do in order to protect your financial future and freedom. Not having any power downright feels awful. The fact that you have to say yes to everything that your employer wants will not make you feel like a human being.
2) Save Money for Your Family
Life happens faster and more unexpectedly than we would like. What if your kids need new braces? Another of the 3 reasons to save money is to save money for your family. Your growing family has increasing demands and needs as more time passes.
Maybe they want to play tennis in high school or maybe they want to learn to play the piano. It’s one thing to not earn money because you don’t care about what happens to you. It’s another thing to not earn money even when you have a family to take care of. That’s the ultimate dishonor.
When you have an emergency, you will need an emergency fund to keep you and your family afloat. Maybe unemployment insurance will float you in the meantime. However, do you really want to trust the government that they’ll do their job in providing the funds to you?
What if they make a clerical error? Or if the power lines run out which prevent them from running your application in the meantime? What happens then? We think bad things won’t happen until they do. It’s much better to live with a margin of error than to live life on the edge.
Especially when you don’t even have to live life on the edge in the first place! Family is one of the biggest reasons to save money. Never skimp out on family. You won’t regret skimping out on dinner for yourself. You will regret skimping out on dinner for your family.
The responsibility is with you.
3) Save Money for Security
When the coronavirus pandemic hit in March 2020, Americans did a GREAT job saving money. Our savings rate reached a high of the mid 30%’s! Add in stimulus money and Americans REALLY felt financially secure as they navigated throughout the pandemic life!
For a solid two years, they spent like there was no tomorrow. Then when the music stopped in 2022, they suddenly feel a deep sense of insecurity. The bear market, high inflation, and the unemployment numbers are all printing for the worse. Security just can’t be beat.
Imagine having security when the world is all being chaotic. Imagine being the only one with cash to invest after the downturn is about to reach its peak. One of the reasons to save money is to save for security. For a rainy day. In 2022, I’ve been padding up my emergency funds to the max.
I now have a year and a quarter’s worth of emergency funds and am trying to grow that even further. I can’t imagine not having a good cash cushion right now. Everything is too uncertain for me to confidently spend money like I’ve been the past two years.
Security is one of the best reasons to save money. It’s the best feeling in the world. America has an “at-will” employment structure where you can be let go at any time for any reason. Imagine having a good cushion to fall back if your employer ever exercises that right against you.
There Are Many Reasons to Save Money
The 3 reasons to save money above are great reasons to save money. However, there are more reasons besides the ones highlighted above to save money. Saving money is so important yet so many people neglect it. They think the good times last forever.
The bull market of 2009 – 2021 spoiled everyone rotten. We had record low unemployment, record asset price increases, and record wage increases. However, everything goes great until the music stops. People thought housing prices can only go up until 2007-2009 happened.
People thought stocks only go up until 2022 happened. Everything good comes to a screeching halt eventually. Although the long term trend is up, anything can happen in the short term. How demoralizing would it be to not prepare for a rainy day and then that rainy day actually comes?
I can only imagine just how many people’s hearts sank in the depths of the ’07-09 crisis. My heart sank during the March 2020 coronavirus crash. It sank because it happened so quickly. I’ve never thought index funds would see a 33% decline in just a single month. That was mind boggling.
The 3 reasons to save money is a good start but it’s not the end of it all. There are infinitely more reasons to save money and why it’s in your best interest to do so. You can’t take risks if you have no safety cushion to fall back on. It’s much harder to compete without taking risks.
Why I Save Money
In addition to the 3 reasons to save money above, the biggest reason why I like to save money the most is the because I want to protect my retirement. I’ve seen firsthand of what it means to have no money saved for retirement. Many people actually rely and depend on the government to bail them out.
That’s just not the way to go about life. The government pursues their own interests. If they think that Social Security is no longer in their best interest to dole out to people, they WILL discontinue the program. Millions of Americans could be financially left out with no other option.
It hurts not having access to my 401k money today. The money is locked up and I have no way of using the money for at least the next 3 decades. However, it’s to protect my financial future and security which means the world to me. I know that time passes by quicker than I know.
The next time that I blink, I’ll be in my 60s thankful for my 20s self for putting in the work to save and invest my money. The 3 reasons to save money above are cornerstone reasons to save money. Nothing good lasts forever. While employment is great unemployment also exists as well.
You’re not the only person who depends on you being financially secure. Your family’s lives depend on it as well. Money is too important of a topic to not take seriously in our lives. Many people are uncomfortable talking about money.
It’s not good to let that be the reason why you don’t have an abundance of it.
Saving Money Doesn’t Mean Living Cheaply
A great way to save more money is to shift your perspective. Instead of looking at it as “taking away 10% of your joy”, it’s better to look at it as “living on 90% of your joy”. Too many people focus on the negative without looking at the positive.
That 10% of joy that’s taken away today pays dividends later down the road.
Saving doesn’t mean living cheaply. It means living frugally and spending money on things that truly add value to your life. Spending money on things that provide you joy is good. Not spending money on things that doesn’t provide you lasting joy is also good.
These days, I have a 50%+ savings rate that I am working to improve those numbers even further on. I spend one paycheck out of the month and save the other paycheck in a month. It’s what helped me amass a $400,000+ fortune by the age of 28. And I know I can grow it even more.
Yes, saving account yields have NOT kept up with the rising inflationary pressures we’re feeling today. However, having less purchasing power is better than having less money, period. It’s better to live to fight another day instead of betting the farm trying to become outrageously rich.
The 3 reasons to save money is a good start and a good step towards financial literacy. Too many people see saving as the enemy and not as a friend and get burned as a result. No one ever went bankrupt because they saved too much money.
3 Reasons to Save Money Shortlist:
- Save money for freedom
- Save money for your family
- Save money for security
