The Real Reason People Save Money

piggy banks

This morning it was 2 degrees outside when I woke up. When it’s that cold outside, most people tend to want a hot cup of coffee or hot chocolate to warm them up. However, I made myself an iced latte this morning. Most people think I’m crazy for drinking iced coffee when it’s hardly holding a positive temperature outside. The idea of a hot drink does sound appealing, but I honestly enjoy the taste of cold coffee beverages over hot ones — it’s my personal preference. This made me think of other things I choose in life that may make me seem crazy to others. One such thing is choosing to spend less than I make and save money for the future. Chances are that most people reading this article don’t think that is crazy, but many other people would rather spend their money than save it.

Setting aside the terms “smart” and “foolish” in regards to how people handle their money, I think of it as simply a choice or a preference. We all have a choice in how we handle our money and what we do with it and our preferences determine what we will or will not do. The real reason I save? I prefer the benefits that saving and investing brings. Here are a few ways that my preferences shape my saving habits.

I prefer to know that when an unexpected bill comes up, I have money to pay it.

Notice I said “when” an unexpected bill comes up, not if. Stuff happens, things break, and unexpected events will come up. If I chose to spend all the money I make, I would stress out every time one of these bills would pop up and I would have to try and figure out how I would get the money to make that payment. I would prefer to simply know that I had the money in my savings account and could take care of that sneaky bill.

I prefer to know that I can pay my bills whenever they are due.

My husband used to get paid on the 1st and 15th of every month and my paychecks came on a weekly basis. I had a system worked out with our bills where the first half of the month’s paychecks went toward certain bills and the 2nd half’s went to towards the other ones. Well recently, my husband’s paydays changed to every other Friday and the third Wednesday of the month. Trying to balance out 7-8 different paydays a month has not been easy. There are times at the beginning of the month when our mortgage and credit card bills are due on the same day — before a payday for the month. We have the money budgeted out to pay these bills, but when the bills come before the paychecks, it’s difficult to balance. Luckily we are able to take money out of savings to cover the 1 day to 1 week lapse that we’ve found our self in recently. Once we get paid we are able to put that money right back into savings. I prefer this option to paying our bills late.

I prefer to know that if one of us was to lose our job, we won’t lose our house.

My husband and I both have pretty steady jobs, but anything can happen and one of us could lose our income. Chances are we could go out and find another job, but in that interim time we know our bills, including our mortgage, would still get paid. When my husband’s paydays recently changed (as mentioned above) so did his salary — to the tune of $500 less per month. This paycut was a bit of a disappointment, but because we had money saved up we were still able to pay all our bills, in addition to being able to buy Christmas presents.

I prefer to be able to help people out.

Sometimes our friends and family go through rough financial times and need help. Recently we had some friends who are self employed and the payment for their next job wasn’t going to come in until after some big bills were due. We were able to lend them some money for a few weeks to get their bills paid on time and help stay current on their payments.

I prefer to watch my net worth grow.

Money isn’t everything, but it is nice to watch our net worth grow and actually have something to show for the money we make at work. Money is a tool and the more you have the more you can do with it. When I watch our net worth grow, I know that there are a lot more opportunities that I could take advantage of to make more money or to give more to charitable causes.

I prefer to know my future is secured.

Granted there are no guarantees in life, but for the most part, I know that we have money set aside to be able to live comfortably in retirement. I’m not worried about social security or pension plans because we are making sure that our retirement fund is a priority. I don’t plan on living off our kids when we get older so it’s nice to know that we have money earmarked for the future.

So many things life are choices and preferences and our finances are just another facet of that. Whether or not we acknowledge it, we are making choices everyday with our money. There are people that prefer to have all the nice material things instead of the security of knowing the bills will be paid. The beauty is that we all have the freedom to choose and I’m personally happy with my choice.

Image courtesy of bebouchard

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8 Responses to The Real Reason People Save Money

  1. Chica Marks says:

    Thanks, Cortni Marrazzo, for sharing your thoughts about why you save money. For what it’s worth I share your preferences and I like saving money too.

    The personal saving rate in your country is very very low, despite the paucity of social safety nets compared to other industrialized nations. Is that because of policies focusing on increasing the divide between the very rich and the rest of us, or is it because most people don’t share your preferences for saving?

    You wrote “There are people that prefer to have all the nice material things instead of the security of knowing the bills will be paid.” If these people, who don’t share your preferences for saving, are numerous enough to bring the savings rate down to or below zero, then why is the consumer spending such a worry?

    I don’t mean to be confrontational — I already stated that I agree with your reasons for saving and share them too; however, it has always appeared to me that Americans spend on nice material things because they have a stash. Obviously my perception is awry in the face of current evidence, and I don’t know why I persist in believing Americans are rich — maybe it’s the inundation of advertising or the full parking lots in the mall or the cars I see on the road.

    “Granted there are no guarantees in life”… a gentle constructive suggestion for you or another on your team of contributors for an article, if one hasn’t been printed already (please someone give me the URL) but what is “enough”? How does one get to the point of being 99.6% sure that they can handle sudden disability, flood/fire/famine, sudden loss of immediate family, sudden loss of job, in a country with a poor safety net and a rough economic future ahead, before sprinkling some disposable income around the community in terms of spending? That’s what keeps me up at night.

  2. A Marino says:

    To Chica: I think that many in the world think that Americans have stashes and that’s why they buy so many material goods. The truth is that their stash is in a plastic card called credit, which is why we are having problems in this country. Many are just living above their means instead of saving.

  3. Well said!

    I try to think of every purchase in similar terms: do I prefer to have this, or to pay down the debt. The fact that I have debt shows (at least in my case) that sometimes I have preferred the stuff.

    I’m not totally against having debt, but my preference for not having debt is getting a lot stronger and that’s what’s really helping me spend less.

  4. Alex Liu says:

    Yup. What you did was crazy for the short term because it’s really not worth it because of those tax policies and people’s habit.

    But when you look in the long term, you are the smart one. Although future is not something you can predict, you are willing to take the risk and be who you are right now!

    Alex Liu

  5. TheWalrus says:

    Hey, nice blog! I grew up paranoid about saving because I know what it’s like to have parents live paycheck to paycheck. It’s a very stressful lifestyle and it leaves the door open for hard times should an emergency take place.


  6. jennifer says:

    i actuly think that saving money is important for such and such times like if a car breaks down or emergencies or funds & espacialy for education everything has it’s matter

  7. nabil says:

    I prefer saving instead of just spending the money because surely you are going to face an emergencies situation, so how can you face or pass it if you don’t have enough money.I really suffer by spending the money whole the time . If I have the money.I’ll just spend it. How can I get rid of this proplems?

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