There are a few simple reasons why I make sure to save money.
- My savings are a priority in my monthly budget.
- I treat my savings with the same importance as any bill.
- I need savings for a secure future, including retirement and emergencies.
When I created the budget I live on, I first made a list of my essential bills. This way, I can be sure to allocate money to cover them before distributing the remaining funds to discretionary expenses.
My essential bills include obligations to creditors, such as my monthly mortgage payment. But they also include sending money to savings. In fact, I view investments in retirement accounts, as well as several other savings accounts (including my emergency fund, vacation fund, and home repair fund), as must-have bills that have the same level of priority as my obligations to others.
Saving is really essential
The main reason I consider investing in savings accounts a crucial monthly expense is that do not saving money can lead to a host of financial problems.
Now, paying the bills is important to avoid ruining your credit and facing financial disaster, like foreclosure or eviction. But for me, it is equally essential to save money to avoid other types of financial crises.
Without savings, for example, it would be very difficult to live as a retiree – Social Security benefits only replace about 40% of pre-retirement income (not the 80% to 90% recommended by most experts). Without savings, a home repair bill, disaster, or trip could also lead to debt, which can lead to long-term financial hardship.
Since I believe my financial stability depends on having plenty of money in savings — just as it depends on paying all my other bills — I see no reason to treat investments in my retirement and other savings accounts differently from my mortgage, monthly phone bill, utilities and other obligations that I am 100% sure of meeting.
Treating savings like a bill to pay gives it the priority it deserves
The other big reason I think of saving as a bill to pay is that by doing so, I can make sure that I’m actually going to reach my financial goals – and that I won’t be spending money on things I don’t. I am sorry.
I figured out exactly how much I need to invest each month to achieve different financial goals, like making sure my retirement nest egg is the size I want before my preferred retirement date and making sure I have money for major home repairs, if any. Since I know what I need to invest, I budget this amount as one of my top priorities.
By paying myself first, as well as with outside companies I have obligations to, I don’t end up being wrong because too much money is going to something else, leaving me with too little to achieve my goals. savings. I work the rest of my budget around my monthly savings goals so I know for sure that I can set up automated payments to my savings accounts – and so I can enjoy spending what’s left without worrying about making the wrong move. thing with my money.
Treating my savings like a bill to pay has allowed me to regularly invest the money I need for many years – and it’s something I think everyone should consider doing.
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