Be Young, Be Frugal

saving money

I was pretty young when I got serious about saving money and being more frugal. I didn’t do it with some grand notion of preparing for my old age or anything, I just wanted more money for emergencies and to give me more choices in terms of where I might live and work. Looking back, though, I understand now why starting young was the smartest thing I could do.

Too many people put off saving, thinking, “I’ll save when I’m making more money, or when the kids are gone, or when I’m older and I’ve had all my fun.” The problem is that saving when you’re older becomes a dicier proposition as the years go by. Yes, you may be making more money but you’ll also likely have more demands on your money. You may get sick and become unable to work. Or, you may have to start paying people to do the things you used to do. Saving when you’re young gives you a cash reserve that you can draw on as you age and, thanks to compounding, means that you don’t have to save as much as you get older to reach your target. Here are the top reasons to save while you’re young and not put it off until “someday.”

Compound Interest

This is the most obvious reason to save while you’re young. When you save in interest-bearing accounts, your interest compounds the longer you leave the money in there. If you put ten dollars into an account earning three percent interest per month, you’ll have $10.30 at months’ end. The next month, you’ll have earned thirty-one cents in interest, bringing your total to $10.61. Even if you don’t add to the account, you continue to make money every month. The more months and years you save money and leave it alone, the more interest you will earn. Obviously this example won’t amount to much but if you’re dealing with thousands of dollars, an extra year’s or five year’s worth of interest will add up. The younger you are when you start to save, the more time your money has to grow.

As You Get Older, Things Become Harder To Do On Your Own

In your twenties and thirties, it’s nothing for you to mow your own grass, refinish your own floors, keep a garden, or paint your own house. You can save thousands by doing many chores yourself if you’re frugal. When you get older, it gets harder to do those things yourself. You may want to be frugal, but it just isn’t possible. Aches and pains may make installing a new floor impossible. Arthritic hands may mean that you can’t clutch a paintbrush for hours. You don’t even have to be elderly for these things to happen. As early as your forties you may begin to feel aches and pains that make routine chores uncomfortable. When it happens, you end up paying someone to do these things for you which will eat into any money that you’re able to save. If you’ve always thought, “I’ll save when I’m older,” you may instead find yourself paying more to have more things done for you.

Money Gets Tighter As You Get Older

If you’re fortunate your income will go up as you get older. Unfortunately, the demands on your money are likely to go up, too. You might have kids and college expenses, aging parents that require assistance, increasing healthcare expenses (even if you have great insurance), and you might want things like a bigger house or a nicer car. All of these demands on your money will eat into what you can save. You might have a big income but find your savings rate going down instead of up. If you’re also now trying to save aggressively for retirement, you might find that the money just isn’t there.

Things Get More Unpredictable As You Age

While the unexpected can happen when you’re young, it seems to happen more often as you age, simply because you have more in your life that can go wrong. Kids can get sick. A spouse can get into an accident. You can lose your job and then a month later your spouse can lose hers. You have to go back to school before you can get a new job. You can have an illness or that family history of heart disease catches up with you sooner than you planned. I don’t say this to be all doom and gloom, but the fact is that these types of accidents, injuries, and illnesses can put a serious strain on your finances. It may mean that, not only can you not continue to save, you have to dig into money you’ve already saved. You may be making a great salary but find that none of it can go into savings. If you save more when you’re young and you only have to think about yourself, you can find yourself in a better position to weather the unpredictability of later life.

Your Responses To Unpredictability Are More Limited

If you lose a job when you’re young and unencumbered, you can move more easily or take more risks to find new work. You can also cut your spending drastically, since you only have to care for yourself. When you’re older with a house and kids in school, it’s not as easy to up and move for a better job or more prospects, or to cut your spending to the bone. Unemployment insurance might be enough to see you through when you’re young whereas when you’re older with a family to support and maybe higher medical costs, it won’t be enough. If you get sick or have an accident when you’re young, you might be able to get by on Social Security or move in with family or friends to decrease your expenses. When you’re older, those responses aren’t practical or helpful. You need more money saved when you’re older to handle life’s curveballs because your other responses are going to be limited. If you saved when you were young, you’ll have it. If not, life could get a lot harder.

It’s best to put as much money away as you can when you’re young so it will be there if you need it. If you can keep saving as you age, great, but if you can’t at least you’ll have that cushion you amassed in your younger years to fall back on.

(Photo courtesy of alamosbasement)

This entry was posted in Budgeting, Frugal, Personal Finance, Saving Money and tagged , , , , , , , . Bookmark the permalink.

7 Responses to Be Young, Be Frugal

  1. Julie says:

    I could not agree with you more! I am a 48 years old with one son in college and the next one graduating from high school this year. My husband and I worked like dogs when we were younger, fixing up and re-selling 5 homes over a period of 12 years. I can’t tell you how many nights we stayed up until well past midnight working on home improvement projects, then were up at 6:00 AM the next day for work. Now bedtime is about 9:30 PM for me and most of my friends who are nearing 50. For women…hormones play a big part in their energy level. I would say the most common complaint I hear from my female freinds is about their lack of energy. Yet most now have kids in college, and few have saved up for it, and some have to go back to work when they have never worked before. Many are also dealing with aging parents who are not in good financial shape. I could go on and on about the difficulties I see with my friends who didn’t save when they were younger…but to make a long story short, it is much better to have your “younger self” make a few sacrifices rather than expect your “future self” to carry the full load. People just don’t realize the burden they are putting on their “future self” by being unwilling to sacrifice when they are younger.

  2. Travis Gordon says:

    When I was young it was really difficult for me to save money.
    When I was a teenager car insurance was a lot more expensive.
    I’m in my mid 20’s now and have been looking for ways to save money.
    I came across and it has quite a few very helpful tips for someone to save money on their auto insurance.

    It even has an article that talks specifically about teenagers and their insurance. I suggested it to my sister (she has a daughter that’s 17) and she told me she was able to save money.

  3. OfeliaTConejo says:

    I am always amazed by people saying they cannot save money. I stopped in at a local grocery store yesterday and there was a line of young people a mile long paying $5 for lattes and sandwiches they could have made at home. One overweight young woman charged $35 worth of lunch for herself and a friend. I had my store cup in hand and paid 75 cents for a coffee refill. My husband and I are retired, own two 12-year-old cars, have no debt, travel wherever we want, have two homes and are financially secure. I continue to clip coupons and shop in resale of thrift stores. It is called beating the system. Actually it is a lot of fun when you are an informed shopper. We have a good life, but we worked hard to get here.

  4. Great article as always. I preached this same sermon to my son in his senior year of college, explained how if he saved as much as he could for the first 10 years after graduation, he’s an accountant, he would never have to worry about money again for the rest of his life.

    Well…today young people have so many things that entice them to have everything right now and he’s a part of that generation. We just glad the he will be able to provide for himself.

    It’s very true. The earlier you start to save no matter how much the better it is for you as you get older. You’re going to need it.

  5. Gail says:

    I agree that you never know when things will go wrong. I’m glad that I have always lived a fairly frugal life since I would have had a very hard time managing when I got severe rheumatoid arthritis. Forget hammers, I have trouble opening bottles and jars, my husband had to make me a special handle for my toothbrush since I couldn’t hold on to it anymore, the list is long of the things I can’t do anymore. I can’t even depend on feeling well enough to get to the store to pick up the items that we use often when they are on sale. My income was slashed when I had to quit working 10 years ago.

    Even when I was working I was astounded by a co-worker that took her boy to Red Lobster at least once a week because he liked it. She also declared banruptcy. She made the exact salary I did plus collected child support and she couldn’t understand how I was surviving on my income. Well I didn’t go gambling every weekend, I didn’t get my car detailed monthly, etc. Every chance she had to spend money or charge something she did and before she filed for bankruptcy she made sure she had charged a complete summer wardrobe! Even in the financial situation I’m in, we are probably still better off than she is because I doubt she ever learned her lesson. She had no interest in being frugal.

  6. Pingback: Yakezie Carnival Dr Seuss The Lorax Edition |

  7. Miiockm says:

    A 3% rate of return per month would be amazing. It should be a $0.31 return after a year.

Leave a Reply

Your email address will not be published. Required fields are marked *