Why Personal Savings is Critical

As someone who has always advocated for sound finances, one of the many habits I have stressed, both as a writer and in my normal conversations with people, is the belief in maintaining a savings account as well as saving a portion of one’s income.This idea came rather naturally to me as a child, for a number of reasons.

One of them is my dislike of debt, loans, and owing anyone anything other than what is necessary. As I often tell people the “forgive us our debts, as we forgive our debtors” part of the Lord’s Prayer during church services left as a precocious kid with the impression that debt was bad and should be avoided at all costs.

The other cause was my instinctive belief that eventually something is going to go wrong and one needs to be prepared for it. I’m not entirely sure where this came from. Always present was the sense that disaster could occur at any time and you wanted to be ready for it rather than react to it. This attitude applied to other areas of my life as well, but when I started to work a job and earn money this affected what I did with my paychecks.

In other words, I was and continue to be an ardent believer in Murphy’s Law – that which can go wrong will go wrong. Although I didn’t fully understand what this meant at the time, even when I was young I anticipated that times would not always necessarily be good.

Call or pessimism or cynicism, but I like to call it being realistic. One doesn’t have to ignore or overlook facts in order to have a positive attitude about it.

And if you save, there is even more reason to be encouraged than if a hefty bill arrives in the mail and there is no other option than to plunk down the credit card and hope a large bonus is on its way at work.

While there are plenty of hypothetical, theoretical situations to list off to people when recommending that they save their money, often I’ve found they are more apt to listen to real-life experiences when savings were needed.

The truth is there will be times when you won’t be able to save anything. But therein lies the point; those times are why it’s so critical to save when you can, rather than when you need it.

In the last several years, I have experienced such circumstances.

Without going into boring or needless details, I live on a very tight budget, which means I have to account for everything I purchase. This leaves a small amount of my income to put into a savings account.

Until a few months ago I continued to save, at which point I started to seek medical treatment for back and neck pain, something which I’ve dealt with for several years.
Even with a good insurance plan and benefits, there is still a copayment with every visit, which occur multiple times each week. Pretty soon, the bills started to pile up. Suddenly, the discrepancy between what I earn each month and spend each month shrunk down to almost nothing.

Before I this, I had to repeatedly bring my 1998 Volvo in for repairs due to its age and extensive use. Being a foreign car, the parts and maintenance costs are much higher than American made cars and left me paying thousands of dollars to keep it running. (Word of advice: Don’t buy cars that are expensive to maintain or repair if you’re strapped for cash, but that is for another column).

Because I had prepared and saved up money in anticipation for this, however, I was able to pay off the repairs without impacting my finances in any manner other than my savings account.

On top of that, I also happen to commute long distances to work and other activities every day, which means I log in a lot of mileage each week and pay for it at the gas pump. Ten years ago, when gas was less than $2, this wouldn’t have been a cause for concern. But oh, how times have changed.

For example, last month my local gas stations had gas at $4.10 a gallon. For those with short commutes, this doesn’t affect their wallets too much, but when you drive an average of 252 miles a week with a car that doesn’t have the greatest gas mileage like I do, it definitely shows when the credit card statement arrives in the inbox.
When I have a money left over from my paycheck, no matter how paltry, it allows for me to account for variable change in gas prices, as evidenced lately, where it is around $3.25.

If I hadn’t saved anything prior to those situations, I might have been forced to go into significant credit card debt.

This is why saving is critical.

It prepares you for when life unexpectedly and abruptly throws something at you that hits hard financially. If something else were to occur that would require me to spend a substantial amount of money I would be able to handle it without having to also take out a loan or go deep into credit card debt.