If asked most people would agree that saving money is a good thing. But if that is true why do so few people actually do it? In the early 2000’s the personal savings rate in the US actually dipped into the negative numbers for a while. That means most people were actually spending more than they were making. When the Great Recession hit that number improved to about 8%. But since the economy has begun to recover that number has slowly started to sink back down. In 2012 thus far people on average are saving about 3.7% of their income.
So if most people agree that saving is a good thing, what steps are necessary to actually do it?
First key to saving – Contentment
Yet true godliness with contentment is itself great wealth. 1 Timothy 6:6
The first key to being able to save is contentment. This is very difficult in our society. Truth is we are the most marketed-to society in the history of the world. There’s always that one more thing that if only we had we would be happy. Buy something and within days you’ll probably find your neighbor or that guy at work or your friend at church all of a sudden buys one that’s just a little nicer and now you need to go buy one even a notch better.
Truth is if you allow yourself to slip into that trap of trying to keep up with the Jones, you will never get ahead. There will always be something else to buy. And in reality you will never find happiness there. King Solomon was one of the richest men ever, and if you read the book of Ecclesiastes you will find it filled with the emptiness he found in the stuff he acquired here on earth.
Contentment will never be found in things we can buy. True contentment is found in things that have no price. Good health. The love of family. Friends who stick by you no matter what. And most importantly a relationship with our God and a hope for eternity with Him.
Until you learn to be content you will find it very difficult to save.
Second key to saving – Make it a priority
Most of us make enough to save at least some. The problem is that we don’t make it a priority. There is always something else that comes along and consumes our money and we think we’ll save… Starting tomorrow.
Let’s suppose for just a moment that your child is very ill. (Or if you don’t have a child, imagine it’s some other loved one.) The illness is potentially terminal, but the good news is there is a cure. The cure costs $5,000 and let’s say for what ever reason you had to pay cash for the cure. If your child needed to have the cure administered within one year to save their life, would you be able to save $5,000 in a year’s time? Of course you would. You’d save like crazy. Take extra jobs. Sell things. You would do whatever it took to come up with that $5,000. It would be your number one priority.
Now that may be an extreme example, but it makes the point. If saving were a big enough priority, we could do it. Consider though what would it feel like to:
- Not worry if the water heater died, because your emergency fund would easily cover you.
- Have confidence that you could retire eventually with dignity because you were putting sufficient money away for that day
- Know that you could help your child pay for their education so they didn’t graduate thousands of dollars in debt.
- Walk into a car showroom and hand the salesman cash for your next vehicle
- Walk into the bank and make the last payment on your mortgage, knowing the house was now 100% yours.
If you make saving a priority, then you can have the peace of mind those savings would bring.
Third key to saving – Have a plan
Lastly, you will never really be successful at saving until you have a plan. What is that plan? It’s the dreaded “B” word. The budget. John Maxwell says that if you don’t tell your money where to go, you’ll wonder where it went. Without a plan you will always get to the end of the month and realize there is nothing left. And you’ll be wondering what happened to the money that came in. What do you have to show for it?
The best way to budget is to take each month separately. Most people fail at budgeting because they try to create a perfect budget that will last for all eternity. That budget does not exist. Every month is little different. You need to sit down at the beginning of each month and essentially spend that month’s income on paper before the month begins. Account for every dollar you know will be coming in. The first month will probably be a disaster as you’ll find many things that you didn’t account for. That’s ok. You can adjust as you go. Just remember that if you need $50 more for the electric bill, that means you need to reduce some other category by $50. Each month after you will get a little better. By the 4th or 5th month you should find you are starting to get a pretty good handle on it. In time you’ll reach a point where the monthly budget really only takes a few minutes each month.
If you don’t plan to save though, it will never happen.
You can do it!
Saving is very important but it requires you to have a long-term perspective instead of always living for the moment. Almost everyone would agree that savings are good, and having that money saved away leads to a sense of peace that allows you to sleep much better each night. Learn to be content. Dream about what it would be like to have savings and use those dreams to make it a priority in your day-to-day finances, and finally have a plan to make it happen. You can do it! The long-term peace you will feel will more than make up for any short-term sacrifice you make.
What keeps you from saving as much as you’d like?
Photo credit: 401(k)