Reasons
to Save Money
Living
Paycheck to Paycheck?
It
is a well know issue that many people in the U.S. live paycheck
to paycheck. For some people who have very low incomes, saving
money may simply not be an option. You can't really save money
easily unless you have some money left over after you pay
for necessities such as groceries, heat and rent. Yet, many
others, people with middle class incomes and above who do
have enough money to start a savings plan, may live paycheck
to paycheck just because saving is just not a priority for
them
I
have a friend that owns a housekeeping service, and she tells
me that the people who she has the hardest time collecting
money from are often the ones with the most extravagant lifestyles.
You would think that people who live in million dollar homes
and drive expensive cars would be wealthy, but often these
types of people may be living on the financial edge more than
other people who live more modestly.
My
friend tells me that at times she has more trouble collecting
her fees from people in the wealthy neighborhoods than in
middle class ones. Some will try to pay her housekeeping fees,
which are very reasonably priced to begin with, in installments
or delay payments for several weeks. Yet they will have a
Jaguar or two parked in the driveway!
In
the book The Millionaire Next Door, this category of
people are referred to as "big hat, no cattle" types,
meaning they try to give off the appearance of wealth without
really having the net worth to support their lifestyles.
Interestingly,
in the book The Millionaire Next Door, the reality
is that many millionaires live relatively modest lifestyles.
Their frugal lifestyles are exactly why they many became millionaires
- because they always tried to save more money they they earned.
Reasons
to Start Saving
If
you are not the type to save money, here are some possible
reasons you may to consider to help make saving more of a
priority in your life.
1.
To put your children or grandchildren through college.
2.
To buy a home, or move up to a nicer home than you have now.
3.
If you want to have a comfortable retirement, you have to
start saving early. Social Security was never intended to
to provide a sole source of income in retirement. Additionally,
as most people are aware, the program currently has some serious
funding issues that may or may not be resolved by the time
you are ready to retire. A recent Money magazine tip
suggested that as a quick rule of thumb your retirement nest
egg should be 25 times the income you want to supplement Social
Security and a pension. So if you would like to have an extra
$40,000 a year in retirement, you will need to have a nest
egg of $1 million saved up.
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Reasons
to Save for Retirement
Question:
Should I count on Social Security for all my retirement
income?
Answer:
No. Social Security was never meant to be the
sole source of income in retirement. It is often
said that a comfortable retirement is based on
a "three-legged stool" of Social Security, pensions
and savings. American workers should be saving
for their retirement on a personal basis and through
employer-sponsored or other retirement plans.
(Italics added)
From
Social Security Online: The Official Web Site
of the Social Security Administration -
Frequently Asked Questions
http://www.ssa.gov/qa.htm
Related
Link:
Investing
- Few young workers take heed of need to start
saving now .
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4. In case you
become disabled and can't work, or you become unemployed for
some other reason.
5. If you are planning
to have children, saving money now may allow one spouse to
stay at home when the children are young.
6. To have enough
living expenses to live on in case of a natural disaster,
such as a hurricane, earthquake or tornado. No matter where
you live, there is probably some type of natural disaster
that could happen to you or your family.
7. In case of divorce.
Not many people plan ahead for a divorce, but the reality
is that about half of all marriages in the U.S. end up that
way. I've had a couple of friends who had spouses announce,
somewhat out of the blue from my friends' perspectives, that
they wanted a divorce. This
can be really tough when there are children involved and the
main breadwinner is the person who wants out.
| According
to the National
Center for Health Statistics, there are 7.5
marriages in the U.S. each year for every 1,000
people and 3.8 divorces. If you do the math this
means that about half the people getting married
will eventually end up getting divorced. |
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This list of reasons
to save money is not meant to be all inclusive. I'm sure you
can find many other reasons to save, but these should be some
good motivators to get started on a long term savings plan
now.
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