Why You Need to Save with Commitment
An Acceler8now.com Investing Education Resource August, 2007
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If you think that the importance of saving should be so obvious that it shouldn't be discussed, take on a number of people around you to find out how much they are saving regularly. I can save you the shock that may await you by just informing you that a lot of people have many strong and seemingly good reasons why they just must defer saving, each month. They are unlikely to be against saving, they probably want to do it, but somehow, supervening circumstances will always displace that consideration to save. After all, you've got to be alive to save and often, there are forces threatening that survival, which must be first tackled.
Okay, seriously, if you have found yourself in that situation, please don't gloss over it. You must face it as a major problem, irrespective of your income level, because, if you do nothing to break the circuit, that position you are in will undermine your life in many ways. You will move in traumatising circles, remain entangled and hamstrung and ultimately find no real excitement out of life. Here are some reasons why you must make saving a priority in spite of the overwhelming financial odds you may currently face.
- You Need to Break out of the Quagmire
Yes, that same quagmire of poverty or insufficiency that has held you from saving will need to be broken or you will remain stuck. Without beginning to put some resources aside, you will never build the financial capacity you need to break out of it. If you remain mired in that vicious cycle, you will most likely sink deeper into financial trouble. That's one key reason you must face the challenge of beginning to save regularly. It may be slow and extremely tortuous, but you've got to take a definite step forward, if you desire a change in your circumstances.
- More Challenges Lie Ahead - Be Ready
If you can't save today because you believe your earnings cannot accommodate it, you risk a more distressful future because there will be more challenges. How do I know? Because it is the way of the world: more family needs and commitments, more inflation, more bills to settle, more government taxes and a lot more costs hitting your pocket. While positioning to generate more income is an important strategy for tackling increased expenditure profile, nothing can work if you fail to learn to save part of your income. The quantum, even if it increases, will not necessarily improve your financial standing if you have a leaking pocket.
- Cope with Contingencies and Emergencies
You could currently run a balanced budget of sorts, managing to meet your critical needs but with nothing to spare. That position, however, will be precarious, given that unforeseen, unavoidable financial obligations are almost guaranteed to arise. A sudden serious ill health or an accident or some other emergency will mean that you are completely thrown off-balance. Wise people know this and stretch themselves, ahead of time, to provide against the proverbial rainy day. Unless you aren't prepared to deal responsibly with the issues of life, you need to come to terms with the inescapable need to build a fall-back fund.
- It's the Foundation of Investing
Building wealth will only be a serious proposition when you begin to invest. Investing however is an off-shoot of saving. If you can't save some of your income from consumption, investing becomes a mirage. Saving will precede investing and if you get them working meaningfully for you, it's difficult to see how you can't advance financially. Whether you are to invest in financial assets, a business or other investment option, it must begin with creating the seed capital which is the turf of saving.
- Beat Debt Overhang
Another good reason to save will be to increase your capacity to cope with financial obligations and avoid the possibility of running into debt. Debt is a looming danger for somebody who has no financial reserves as any emergency will possibly be met through borrowing. When you get entrapped in debt, your problem becomes compounded as debt servicing will drive you into more crises, while repayment will be a daunting task. The prudent option: gradually accumulate a reserve to strengthen your financial capacity to cope with the inevitable demands of existence without resorting to borrowing.
- Position to Handle Major Projects
If life ends with dealing with the drudgery of daily existential basic needs, it would ultimately be uneventful. No significant projects, no landmark achievements, nothing serious to show? Well, if you want to leave any major acquisitions or projects, you must embrace saving. Most of such undertakings take more resources than anybody can muster at once. A house, for instance, will often require years of saving. Long to own a car or train your kids through quality education? Begin to save, because that's the way to build the funding for such lump sum expenditures.
- Trap Special Inflows
If you don't learn to save, some occassional significant inflows that get into your hands will fizzle away like your routine earnings, unfortunately, and at the end, you will have nothing to show. Take this case. Just before I got to writing this, one of the local banks had just relayed on television, the zonal draws of a promotion that it's running to grow business. A lady has just won N1.5 million (actually several winners, but only her was physically present), an amount that was not in real reckoning as an inflow some seconds before that draw. The reality is that she might have a lot of pending needs that the money could address. If she didn't win the proze, life would have gone on, all the same. If she blows all the money 'solving problems' and, in the end, leaves nothing in the kitty to remember this special blessing, won't it be regrettable? But often, that's how it goes - several dormant needs rear up and as you try to clear them, the money goes, more needs rear up and nothing has changed. It shouldn't be.
- Exemplary Conduct
If you are not a saving parent or senior, how can your kids or juniors learn such important habit? If what you show them is how to stay broke and leave from hand to mouth, struggling with everyday's requirements, you would have done a disservice to them. Turn a good leaf, get organised financially, begin to control your needs and build a financial buffer. If you are not living on the edge, your offspring and people around you will know. You will not only earn well-deserved respect but will be pointing them in the right direction.
- It's a Responsibility
Routine expenditures on consumption will easily consume your income and leave nothing to fortify your future. To save is, just as the word otherwise connotes, is to rescue a part of your earnings from these consuming needs which are ever ready to swallow all up. What you save is, in the final analysis, what you really keep for yourself. It is what stays to enrich your life and strengthen you financially for the future. It is therefore so important to consistently and conscientiously put aside some saving, for your own good.
All said, saving is a major ingredient of a successful life because it provides the seed of financial success. When a saving habit is lacking, you are seeing an individual who will, in spite of the size of income, live a financially traumatised life. The reason is that the capacity to deal with financial challenges will be lacking and the person ends up accomplishing little. Saving is a gradual process and more of a long-distance race, meaning that early take-off and consistent action are critical. To realise the full benefit of the effort, it's important too to follow through with effective investment strategies that help secure the savings, cushion the effect of inflation and optimise returns on this key resource. Get these working and put your life on a pedestal of success, stability and fulfillment, today.
Copyright © 2007. Acceler8now.com. All rights reserved.
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