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.
Photo: John Radin