Is Spending More Fun Than Saving?

By Gail Cunningham, Vice President of Public Relations, National Foundation for Credit Counseling
Spending is more fun than saving. Or is it? Without a well-funded savings account you’re living on a slippery financial slope that can very quickly wreck havoc on your financial life. After all, it’s not if, but when, the next unplanned expense is going to occur. 

Does one of the following represent how you paid for your last emergency?

  • Charged the expense.
  • Borrowed money from friends or family.
  • Used money committed to an existing priority payment such as rent.

These are all poor resolution options. Charging the expense adds to your debt load. Borrowing money from family and friends is at best awkward. And, juggling payments often starts a snowball of debt that is hard to recover from.

I’ve now built the case that having a savings account is better than not having one, but you already knew that. Maybe you’re like the 34 percent of people in the National Foundation for Credit Counseling™ (NFCC) 2014 Financial Literacy Survey who revealed they have zero non-retirement savings. Perhaps you can identify with the 34 percent of survey respondents who carry credit card debt over from month-to-month. Or maybe you can relate to the majority of people who said not enough savings was the area of personal finance that worries them most. 

You agree that you should save money, but feel you can’t afford to. I say you can’t afford not to. Below are two very doable tips that will help you get started on the road to financial stability:

  • If you receive an income tax refund, jumpstart your savings account by earmarking this year’s refund check for savings. Next, adjust your W-4 to more accurately reflect the number of withholding allowances to be deducted from your paycheck. Your paycheck will now be larger, and moving forward you can have the extra money automatically deposited directly into your savings account each month. This plan is better than a once-per-year windfall because instead of waiting on Uncle Sam to return your money, it gives you access to your savings whenever you need it, as unexpected expenses don’t just come around once each April.
  • Here’s a painless way to find $100. Try shaving $10 off of each spending category. Admittedly, some obligations are fixed payments, but others aren’t. Saving just $10 per month on ten spending categories such as groceries, eating out, clothing, utilities and so on will painlessly net you $100 per month for savings. At the end of a year, you’ll have enough money to sustain you through most short-term emergencies.

Once you begin contributing to your rainy day fund, you may discover that saving is indeed more fun than spending.  It’s an exercise the entire family can participate in, and you’ll be building financial security instead of debt.  At the very least you’ll be getting a better night’s sleep.

For more consumer tips, budget worksheets and calculators, or to find an NFCC member agency near you, visit the NFCC website at www.DebtAdvice.org.

This post comes from the America Saves blog. Follow them on Twitter and Facebook.

Tip of the Day

  • Written by Guest Blogger | April 30, 2014

    Check out these 54 Ways to #save on groceries, transportation and more >> http://ow.ly/sfsPP

Saver Stories View all »

How Smart Financial Decisions Can Create Opportunities 

Written by | November 22, 2019

Written by Stephen Ross, America Saves Program Coordinator | November 22, 2019

Of the many stories Military Saves shares, most describe how someone was in dire straits financially and worked their way out of it with the help of Military Saves. This time we want to highlight a different kind of story. This is a story about how responsible financial decisions can build on one another to create opportunities you thought only the super-rich enjoy.

Read more...

Involving Kids in Family Finances

Written by | April 19, 2019

 

One of the best lessons we can share with our kids is about money. By middle school, kids should have a good understanding of how money works as well as the importance of saving.

Read more...

When You Start Small, Saving is Easy

Written by Lila Quintiliani | August 12, 2019

When Attiyya first got married, she and her Marine husband had just graduated from college and were focused on paying off student loan debt. They had both attended private schools and had sizeable loans. Then three months after the wedding, the couple found out they were pregnant with their first child.

The first year of their marriage, says Attiyya, was a balancing act between paying down debt and saving for the future.

Read more...