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Why We All Must Save

February 1st, 2008 at 11:33 am

We all have many reasons we WANT to save:
- Retirement
- Children's Education
- House
- Car
- Vacation
- Etc, etc, etc --- The list is endless.

But it goes beyond wanting to save ... I believe we all MUST save. Driving home from the grocery store the other evening I started thinking about the rising price of food and how these increases must be affecting families of very limited means, especially those who have not saved any money. It makes me sad. I'm especially sad for the children of those families.

We all must save, because we have only limited control over the cost of essentials such as food and shelter. Without savings, how will we absorb a sudden spike in prices?

For example, let's say you are a family of 4 and your average monthly food expenditures (eating at home and dining out once in awhile) is a moderately frugal $500. [I know some of you will think this is an outlandishly high amount for a family of 4, and some of you will think it's not nearly enough. That's not the point. Plug in another number if you like.] If, over the course of a couple months, food prices rise by 20%, suddenly the same food is costing you $600, $100 more per month which equals a whopping $1,200 increase per year.

How are you going to absorb that extra cost while waiting for your next COLA or raise? And what if you don't get a COLA or raise? How are you going to pay an extra $1,200 per year for groceries?

You might decide to cut back on your food expenses, perhaps by eliminating the once-a-month meal out and switching to lower cost alternatives (more frozen veggies and less fresh, for example). But that probably won't make up for the entire cost increase. And you may cut back in other areas. But what if you are at a nearly bare-bones budget? There may not be a lot of places you can cut back. Are you going to make your children and yourself eat cheap food that is of poor nutritional value?

***If you have savings, you have given yourself the gift of a financial shock absorber in the event of dramatic price increases on essentials.***

You can rework your budget, perhaps cutting back a bit here and there while simultaneously allowing your grocery spending to increase a bit to partially keep up with rising food costs. [To use the example mentioned above, that family of 4 might increase their food allowance by $40 per month, make up $30 per month by making some changes to their food consumption, and cut back $30 in other areas. Where are they going to get that extra $40 a month without ringing up credit card debt? From their savings ... either by temporarily reducing the amount they save each month, or perhaps temporarily dipping in to it until they can find some new or higher source of income and replace it.]

I realize that blogging about the NEED to save on a "Savings Advice" site is like preaching to the choir, but I hope that anyone who might read this who doesn't have any money saved will take it to heart.

Please do whatever you must to accumulate some savings. Everyone's circumstances are different and for some people it is really challenging to save. But you must do it, even if it is just a little.

Even if it's just a little thing you can do to save, go ahead and do it! Skip the weekly Lotto ticket and put $1 in your savings jar. Walk or take the bus instead of driving and bank the gas money. Something ... anything ... is better than nothing.

8 Responses to “Why We All Must Save”

  1. boomeyers Says:

    Excellent points and excellent article. We probably do about 500 a month for a family of 5 (give or take, depends on how much we eat out, which is not a lot right now). The points you made were true. You cut back her and pinch there, make more from scratch, but if you were already scraping by, you would really be in a bad place!

  2. M E Says:

    Hopefully, if things were that bad to begin with and only continued to get worse, one could/should/would qualify for some kind of aid. Sorry, but if it came to feeding (my) kids (which granted I don't have), I would do what I had to. I understand no one (well I guess no one isn't true, but most people don't) aspires to live on/off of welfare, food stamps, WIC, etc. but sometimes you have to do what you have to do.

  3. Broken Arrow Says:

    Oh that is so very true. To a large extent, especially for me, saving and investing isn't to satiate some shallow dreams of worldly riches. No, it's for the basic need for survival and everyday living!

    And I guess that's why my friends irk me sometimes (as I have blogged in the past), because they don't realize how hard I'm trying to keep my on boat afloat while they're thinking I'm doing it for the gold trims.

    The serious analogical disconnect in there is the fact that they're the ones who are having a really, really tough time just getting by! One of them no longer has a car because he can't afford one, and another just asked the first one if he could move in as a room mate because he's been out of work for more than 3 months!

  4. Aleta Says:

    Very good article and reminder. I also think that by buying in bulk when items are on sale and using coupons keeps you a little ahead of the game. Savings is so important.

  5. nance Says:

    I agree. We all need to live within our means, and save for those times when things may get a little more difficult. If we would all spend less than we earn, and take care of ourselves, we wouldn't need to have government bail us out.

  6. scfr Says:

    BA - I liked your reference to keeping your boat afloat. We are all going to face stormy weather. We can either trim our sails and ride it out, or we can let the boat capsize and call on the Coast Guard to rescue us. [Yes, I know there is the occasional Perfect Storm when anyone would need help, but I'm talking about the normal storms.] Me ... I prefer to trim my sails.

  7. monkeymama Says:

    Good post.

    For me, our spending has NEVER been a function related to income. It has always been what we felt was sustainable over the long haul. To me this is pure common sense. But it is looked upon as such a weird concept by the average.

    Is it spectacular that we lived on 1/2 our income when we both worked? Not at all. Why would we suddenly want to commit to spending all that money if we didn't expect it to last very long. I don't find it spectacular in the least. Our spending has never been in relation to income.

    Likewise, with time my income has grown much. We like to splurge here and there and have slowly grown our lifestyle with time. We have always made a point to not commit any more of our money to long-term commitments though. Which has left a LOT of wiggle room, and this is precisely why. So we are well prepared to weather stormy times.

    IT was really hard for me to spend more than $10k on a car this last time around, we have always been SO frugal on the cars. I finally realized I could sell it if I had to and go buy a junker. I realized that is tremendous financial freedom as well. So there is some balance there in enjoying nicer things with time and not locking yourself in. (Of course we always pay cash for cars. Does not work with debt and why we wouldn't lock into a long term commitment like a car payment. Paying cash is another ballgame though!).

  8. Amber Says:

    I actually think about saving on a daily basis, because you're right everything is going up. Just wish I had started years ago

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