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Building on last week's post about giving. Today let us explore another of the best things to do with money, saving.
Saving today takes several forms. You can save money in a traditional savings account for emergency expenses, save for retirement, save for big purchases and/or vacations. Each of these activities involves setting aside money separately for a specifically defined future purpose. That "later" part is the key.
Putting money away for later builds a habit of what is called "delayed gratification." This is the practice of willfully and purposefully putting off until later getting something you want. Too often we want something and we are able to almost instantly get it. One-click shopping, convenience stores, 90-days same-as-cash, these are all ways we are marketed to so we don't delay purchasing the gizmo, snack, or piece of "needed" furniture. The good news is, while these methods are powerful, they don't control your buying decisions, you do. All of that said, let's explore a couple forms of saving and why they are important.
Saving for Emergencies
Life is pretty safe nowadays. We travel across the country and sometimes across entire oceans and don't think twice about not coming back. Nevertheless, emergencies still do happen. What if you drive over a few nails and blow out a couple tires? This counts as an emergency since you need 4 working tires for your car to take you anywhere! Could you suddenly afford the expense of $300-$400 in new tires on the spot? Probably not. In fact, 40% of Americans couldn't afford a $400 emergency expense. Building up funds set aside for such emergencies is not only wise planning, it's essential planning!
Saving for Retirement
How many of us dream of the days when we have left our day jobs behind to really pursue what we love. Or perhaps the goal is to take all that time to travel the world. Maybe you want to do something you feel is more meaningful. The good news is all of that is more possible today then ever before. The bad news is, all of that takes money. If you haven't put any money away for retirement, you won't HAVE any money at retirement! Funny how that works. How much to save will be a discussion for another time, but for now, if you want to make those retirement dreams come true, take actions today to make sure they happen.
Remember, despite all the marketing, you control your money. You can make decisions and take actions that reinforce this truth or undermine it. I encourage you trend toward the former, not the latter.