Are you underestimating the power of saving?
Unfortunately several years of crappy interest rates on savings accounts has caused many of us to ignore the benefits of learning to be a saver. Even some who regularly socked away a little something have abandoned their steady savings habit.
What’s the point, with no rewards…right? Why not just let your spare cash set in a checking account? Because you’d be missing out on a key habit!
Whether you are a cash-strapped student or busy mom, young or old, employed or not, you don’t want to underestimate the power of habitual saving. Developing a savings mentality makes impact far beyond that meager percentage the banker pays in interest.
Here’s 7 reasons why it’s good to be a saver:
- Savers learn to allocate resources differently. Those who learn to save money to reach a goal often look at their overall spending in a different light. Many consider the trade-offs, or opportunity costs. When saving for a car and a vacation, for example, they might decide they can be happy with less expensive choices for both items and enjoy both sooner.
- Savers develop skills in delayed gratification. Think of saving as delayed spending. There is value in having an end goal for saving, whether it’s short-term (like new shoes or to buy holiday presents) or long-term (saving for a car or house).
- Saving in one area overlaps to saving in others – it’s a mindset. Once you start saving, the habit can extend beyond stockpiling pocket change. For example, you might be more inclined to look for ways to reduce your costs by changing grocery shopping habits, borrowing books (and e-books) from the library, reducing monthly subscriptions, recycling, trading with others or re-using.
- Saving becomes a lifestyle, one passed onto your children. Even simple money-saving acts become habitual—such as emptying your pocket change into a savings jar, using coupons, buying items only when on sale, using a budget. Not only do these become part of your ordinary routine, but they are also a routine your kids (and grandkids) will model.
- Saving often becomes investing – a key to financial success. Many savers make a natural transition to become investors. Once they see how their money can compound to make more, they want that compounding to happen faster. That’s when investing becomes a possibility, even though with greater rewards comes greater risks.
- Not having a savings mentality costs you even more money. Sadly, those who do not learn to save, pay more for almost everything. This comes in the form of paying bankers to lend you money, paying credit card fees, racking up interest charges on debt. Not having an emergency fund means borrowing money for the unexpected. Not having money in your bank account means paying the overdraft fees. Overuse of credit cards and revolving balances means a lower credit score, which translates to paying high interest rates for loans.
- And yes, even small sums add up. The magic of compound interest should never cease to amaze. Left alone, even saving $5 a week can multiply into a nice nest egg and keep you away from the brink of financial disaster. Plus, the interest rates that banks pay savers will eventually rise, and it’s nice to have a nest egg to take advantage of that.
Once started, both good and bad habits are hard to break. You, too, can start the savings habit. How fun will it be to have that nest egg?!
