The importance of saving

37 Replies

@Ola Dantis as a side note, Discover online savings bank offers just over a percent for accounts. It is still a tiny percentage, but at least I get $10.00 for every $1000 and not $0.10 like I did in Chase Savings :)

What I like about Discover is that I can have multiple accounts under one user-name and that allows me to nickname them with the categories I save for (outlined briefly in the first post above) and the transfers are super easy to execute.

Keeping your money in investments sounds good, I think these savings accounts are just for being 'responsible' and saving for an emergency.

@Ian Walsh - I agree! I just spoke to a friend today, she is saving a small amount for each of her kids weddings each month. I asked her about putting it into an index fund and after I explained it she said she might do that someday. She had had no idea what these were...

I think many of my friends and family just view investing of any kind as 'very risky' (with nightmarish stories of great-aunt Molly that lost her life's savings with a bad Investment/investor flashing through their minds)...

Savings is a great first step, but it is the financial education and subsequent investing that will make the wealth happen!

@Thomas S. - I respectfully disagree. I actually think that when I look back at how I was generous with my money even before I got rich, I will know that the generosity I feel is real (i.e. I gave before I had that  much to spare). I know this sounds naive and idealistic, but it is simply what I want to do until it proves to be an obstacle to getting rich. I would agree that savings should be a high priority and I am working on increasing my income so that I can save a larger percentage of my money for the long term goals I have.

It also happens to be that many of my 'whys' for getting rich are related to the things I can do for others with my money, but that still doesn't explain why I insist on giving 10% even now. The truth is, I have a savings account I transfer the 10% to, and do not necessarily give it/ make a donation right away (the account has a few thousand currently) because we don't like to give to just any cause out there, choosing the ones meaningful to me.

Also, can you clarify what it means 'when I have no use for it' (the money)? Because I can imagine that once I have more money (i.e. wealth) I will likely find more and more uses for it (nicer home, nicer clothes, nicer and lavish vacations, more investments etc.)

What financial barometer would you say is when I've hit that level?

I put 12% into a Roth 401k, and depending on that month's commission I save 70-80% of my take-home pay after that. I do this by house hacking, which I admittedly would have never done without my girlfriend casually telling me about BP at dinner one night about a year ago. Combining the house hack and cash flow from my one other property, my housing expenses are more than paid for by other people. 

High savings rates are also much easier with high incomes. I made $154,000 last year, and through April am pacing for $234,000 in 2018 (I know it's early in the year, but heck it's still exciting to track). I just turned 26, so keeping my expenses low isn't very difficult. This can all change with marriage and kids, but I look forward to enjoying that part of life only once I've built a solid foundation to build that family on. 

@Fradel Schaechter I appreciate your reply and especially the book recommendations. I'm going to read both of them and then I will be contacting you for spreadsheets. Thank you again

@Fradel Schaechter

I began saving since I had my first job in high school haha- Living way below my means. 

I think its a habit that is hard to begin.. if you have never saved before 

@Steve Bracero - I agree, it is a difficult habit to start, and takes a lot of self discipline at first to stick to, but I have found that now that I do save (pay myself first) I can't imagine going back to what I used to do (i.e. spending all the cash before the next check arrived...)

Good for you that you started right away! :)

Originally posted by @Fradel Schaechter :

@Ian Walsh- I agree! I just spoke to a friend today, she is saving a small amount for each of her kids weddings each month. I asked her about putting it into an index fund and after I explained it she said she might do that someday. She had had no idea what these were...

I think many of my friends and family just view investing of any kind as 'very risky' (with nightmarish stories of great-aunt Molly that lost her life's savings with a bad Investment/investor flashing through their minds)...

Savings is a great first step, but it is the financial education and subsequent investing that will make the wealth happen!

 Everyone has their own emotion and opinion attached to money.  I personally find it to just be a tool used to amplify resources ultimately purchase time.  Compound interest is really hard to argue with.

I aim to save 50 percent of my take home income and over time this will likely go up as I earn more. Eventually I’d like to see 70 percent or so. This goes to a mix of real estate investing and retirement.

I can essentially do whatever I want as far as living expenses, Travel etc for 25-30k a year so as I earn more I will simply save the difference.

We save about 50% of our net income. For us it’s all about creating a system so that it’s automatic. Multiple bank accounts all with designated purposes with direct deposit and bills on auto pay. All of our day to day spending is done on a cash back rewards credit card that is payed off in full every month, also on auto pay.

We have found that saving money is much easier if you cut back on the big ticket life expenses, the “status symbols.” We focus on those rather than cutting out the small stuff. It makes me feel broke if I have to refrain from eating out or getting a cappuccino from Starbucks. I don’t sweat that little stuff. We drive paid off cars and live in an apartment that is less than we could afford. We eat out a couple times a week and buy things here and there and still save. We plan on having children in a couple years and we’ll move when the time comes. But for now there’s no reason to pay more for a roof over our heads.

@Caleb Heimsoth and @Jonathan Hulen a 50% savings rate is awesome!

I like what you said about automating the payments and the part about saving on the 'status symbols' and then having more flexibility with the small stuff. Sounds like a great approach!

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