In their book, On My Own Two Feet: A Modern Girl’s Guide to Personal Finance, authors Manisha Thakor and Sharon Kedar address the importance of savings, while also acknowledging our resistance to it. They talk about how saving money is simply a habit, similar to flossing our teeth … and both are necessary for optimal self-care.
They go into some detail about why it’s important to save regularly, and do a lovely reframe on the behavior: “At its core, saving is really about spending. The whole reason you save money today is so that you can spend it in the future.” So at its essence, we’re talking about delayed gratification: spending later vs. now.
Thakor and Kedar point out that we save for three basic reasons:
- To have a cushion—or an emergency fund—when life’s unexpected expenses arise. Research shows that the typical American has $2000 of “unexpected” expenses each year. To put this in context, more than half of women ages twenty-four to thirty-five have less than $500 in their savings accounts. So where do you think the difference often comes from? Yes, that’s right, your frenemies’ MasterCard and American Express.
- To be able to pay for big-ticket items in the future such as a car, grad school, a down payment for a home, etc. without having to incur debt (often at a hefty interest rate).
- To ensure a financially secure retirement because we can no longer count on the support of the government and corporations to provide for us in our later years. The burden of planning for our retirement has become our personal responsibility. And here’s a sobering statistic: currently the average female beneficiary gets less than $850 per month from social security. (Can anyone say cat food?)
I want to share my own experience of developing this savings habit, to hopefully inspire you. Up until my money meltdown a few years ago, “savings” was not a word in my vocabulary. But one of my remedial actions was to start saving via automatic deposits. Personally I find this the easiest way. It fortifies my resolve by leveraging the power of technology.
I started with a small monthly amount, knowing I just needed to get started. What happened is that I simply adapted to operate with a smaller monthly “money pot.” It was pretty painless, which I did not anticipate.
And then this interesting thing happened. I began to love seeing the numbers increasing in my savings accounts! I can personally say that the comfort provided by an emergency fund is priceless. It’s the kind of thing you really can’t appreciate until you experience it viscerally. So read on for my invitation to create your own savings muscle training camp.
Financially Smitten Call to Action for You Today:Just do it. Start an automatic withdrawal savings plan with an amount you can stomach, even if it’s twenty-five dollars a month. Just start girlfriend!