5 Reasons Why You Should Save for the Future & Some Tips on How:
1) You Owe it to Your Future Self:
When we are young and energetic and feel like we have the whole world ahead of us, saving for the future doesn’t seem that sexy. But we owe it our future selves to save. When we want to slow down in life and enjoy time doing things like spending more quality time with family and friends, we will see the importance of saving then.
2) You Owe it to Your Significant Other:
Whether you have joint accounts or have everything separate and split expenses, having some savings from both sides provides one less strain in the relationship. Every relationship will have its good season and bad season and they may not all be money related. But money fights tend to conjure up other unrelated issues in relationships that can create major strains moving forward. You owe it to your relationship and the person you are with to save.
3) You Owe it to Your Health:
72% of Americans stress over money some of the time and 26% of American stress over money all of the time. In Canada over 70% of Canadians would be unable to make their regular bill payments if they stopped working for a month. About the same amount have less than $1,000 saved for emergencies. Money interconnects with so many other areas of our lives that the lack of it causes stress to anyone. Stress can cause unexpected medical issues like stroke, heart attack, high blood pressure, sleep insomnia, over or under eating to say a few.
4) You Can Change Your Family Legacy:
Growing up, saving for the future was not something that was discussed in my home. Don’t get me wrong though, my parents did a great job in taking care of all us and we never were without, but more focus was placed on academics and doing well in school. It’s only in my adult life once I got laid off from one of my jobs that I learned the importance of savings. As I mentioned in the about section of my blog, my parents live in Africa so if I get into any financial difficulty, moving back home with mom and dad to weather the storm is not an option for me or my husband. This is why having a sufficient amount of savings is so important to me.
I also want to pass the discipline to save on to my kids in the future. From as young possible, I believe kids should be taught the importance of savings, spending and sharing. The younger you start them, the easier they will transition with this notion in adulthood.
5) You Work too Hard Not To Save:
Lastly, saving is like a reward each pay cheque for a job well done. Of course it doesn’t feel like a reward at the time, but it’s a reward for your future self. You’re working hard now so that in the future, you won’t have to. And let’s face it, you work too hard not to have something at the end of the day set aside for yourself.
Here are some ways that my husband and I save for our future:
1) We both have 5% of our gross pay deducted from each of our pay cheques and both our companies match 100% towards retirement
2) My husband is also enrolled in his company’s pension plan. No company pension plan for me.
3) We save an additional 15%-20% of our take home pay and put the money in a tax free savings account (TFSA). These monies are invested in a moderately aggressive balanced portfolio and re-balanced yearly
4) We allocate $70 every 2 weeks for couple’s activity. I try and reduce the cost for most of our outings by seeing if I can purchase them at a discount at Groupon. Any savings from Groupon gets banked into long term savings. For example, if an activity would cost us $50 to do, but I can get it for $35 at Groupon, I would put the additional $15 into long term savings.
5) Use coupons from P&G Everyday Canada and Superstore coupons when applicable. The savings from using the coupons would get banked into long term savings.
6) We originally allocated $250/month for our term 65 life insurance & critical illness coverage for both of us. Anything above that amount we felt would be stretching us financially. However we were rated $160/month after completing the insurance company’s medical examinations. We allocate the additional $90/month in long term savings.
7) Any additional income that is not budgeted to go towards a needed expense goes into long term savings.
These are just some ways that we try and save for the future. It’s not a perfect science and we may not always be able to save as much as we would like month to month. For example, last month I had all 4 wisdom teeth removed and needed to get a new cell phone outright (I hate contracts) after my old one crapped out on me (but to be fair I had it for 4 years). This came to a total bill of about $1,300 for both expenses, even after insurance covered their part for the dental work. This reduced our take home pay savings rate as we paid cash for these expenses, but it’s March now and we are back at it.
By keeping our standard of living the same, any additional increase in income and savings goes towards growing our wealth and long term financial security. Many people fall into the trap of increasing their standard of living as their income increases. Fancier homes, cars, clothes and other toys. This not only ensures no savings for the future, but requires a continual consumption of funds to keep up with the change of life style.
Are you saving for your future? If so, how?
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