For most of the nearly twenty years of our marriage, we never had any money in our savings account. Oh, we’d occasionally shove some money into the account for a week or two, but we’d always find a reason to take it out and spend it. Either we’d spend it because we needed it to pay bills (because we spent our bill-paying money on other stuff), an “unexpected” expense would rear its ugly head, or we’d see a “new and shiny” thing that we “needed”.
We read all the advice about paying yourself first, but, you see, that “didn’t apply to us” because we were “different”. We didn’t make as much as others. We had more expenditures than others. On and on the excuses went for many years.
Then we got sick and tired of being sick and tired and began a journey out of debt. Along the way we learned that, guess what: we actually can live below our means and save money!! Eureka!!
Truth be told, we did have many justifiable reasons why we couldn’t save. But that didn’t change the fact that we needed to have a savings account. In my humble opinion, everyone needs to have a savings account, and no, an available credit card balance does not count as an emergency savings fund. I’m talking about real money in the bank that actually belongs to you.
Why a Savings Account is Important
There are many reasons why actual cash that you own in savings is a smarter plan than using your credit card as your emergency fund or foregoing a savings plan altogether.
Major Life Event
In 2010 my husband was laid off from his job. Our one-income family was now a no-income family and we had no savings to speak of. Our solution? Continue to live at our current spending rate and make up for the lack of income by using credit cards. What resulted was tens of thousands of dollars of credit card debt that is taking us years to work our way out of.
Trust me when I say you don’t want to go there.
Recommended Reading: The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
Instead, start building a solid emergency savings fund right now in case a job layoff or other major expense comes your way.
Freedom to Follow Your Heart
The thing about having lots of debt and no savings is that when you get sick and tired of working a job you hate and want to start following your dreams, it’s not an option. When you have big debt and no savings, you’re tied to that income, and dream careers don’t necessarily come with a dream income – at least not at first.
By dumping your debt and building a plush savings balance, you put yourself in a position where you can make big changes in life that are more in line with your dreams.
Not Being in Bondage
Debt and a lack of savings equals slavery: slavery to your employer, to the banks and credit card companies that you owe and to working a certain number of hours per week in order to have the money to both cover the bills and have food to eat.
We began our getting out of debt journey because we got sick and tired of being slaves to others. Soon we’ll be in a position where we won’t be tied to our current life of bondage, and honestly, I can’t wait.
Okay, you might say, you’ve convinced me that I need to start saving money. But how? There’s just no room in the budget.
Yeah, we thought that too. But we learned that the number one rule that nearly all experts suggest for building up a plush savings account is:
Pay yourself first and leave the money there.
And now that we’re living by that rule, we’ve learned that it really does work. Even on a tight budget. Because what happens is that when you take your savings amount off the top of your income, you eventually learn to live within your new, lower disposable income. And – double bonus – as you see your savings balance grow, you get more inspired to keep on saving.
So set yourself a savings goal today and start working toward building that plush savings account. You got this.
What are your best tips for increasing your savings account? What numbers on this graphic surprised you the most?
Image courtesy of: Flickr 401(k)2012