Living on the edge can be a great way to add excitement to your life. I realize the term is somewhat relative in that what may be considered living on the edge by me could be considered tame by you and vice versa. That being said, a recent survey shows far too many of us have one unfortunate thing in common – very little savings.
The survey, while not reporting anything shocking, reveals that 62 percent of Americans have less than $1,000 in savings. Not only that, but the survey also shows 21 percent of Americans don’t even have a savings account. If you ask me, that’s far too much risk to take on.
The Underlying Problem
We often hear the need to have an emergency fund. I know they’re not exciting. I know it means you have cash sitting there doing nothing. That’s missing the point. The point is to prepare yourself to act when emergency strikes. Life is unpredictable and you never know when something is going to happen.
When was the last time your car warned you about an upcoming $500 repair it was going to require? Or your air conditioner let you know beforehand that it was going to be on the fritz?
Last I checked, that never happens. Thus, we are given no notice of the need to act. The underlying problem, in my opinion, is thinking we can just finance the emergency through some other means than what we already have. That can only lead to more debt, creating a cycle that’s hard to break.
Savings Rates Are No Good, Why Should I Bother?
A common excuse I hear for not having more in savings is that interest rates are horrible. I completely understand that. I remember back to when you actually made something from a savings account. That has not been the case for years and it shows little sign of changing anytime soon.
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So, why should you bother? One simple reason – it makes you financially healthy and able to handle things life throws at you. Don’t get me wrong, I’d love to make more than a few measly pennies each quarter in our emergency fund. That should not matter. What matters is that it allows you the ability to act with confidence and sleep peacefully at night.
The amount you should save is dependent on your particular situation, but the point remains you’re best served by having something put away, regardless of the rate you make.
How to Save Money When There’s No Extra Money
This is another common excuse I hear and one I empathize with a lot. Wages aren’t the greatest and families can be expensive. It can be difficult in some circumstances to find extra money to tuck away into a savings account. However, it can be done. Here are a few of the ways to save more when you have little extra money at the end of the month:
- Negotiate your monthly bills to lower amounts
- Make extra money in your free time through a side hustle
- Consolidate outstanding debt to save on interest
There are many other ways to get extra money to put in savings; you just have to want to find or work for it. It may not be easy, but it can be relatively simple to do with the right mindset.
We never know what life will throw our way. It’s best to be prepared, so setbacks roll off your back instead of putting you further behind.