Why save money?
Life savings keeps your head above water during choppy times and through the unchartered waters of retirement. Moreover, life savings doesn’t just literally save life; it’s your safety net to keep you and your family healthy through thick and thin.
If you’re among the more than 80% of Americans without a life savings, you’re missing out the eight ways life savings can help you and your family to live a healthy, happy life even in bad times.
1. Peace of mind
Peace of mind—knowing that you have enough savings to back you up in case of accidents and illnesses—is the real treasure in life savings. In fact, a Merrill Lynch survey among people who save showed that 80% of the respondents value peace of mind over accumulating wealth.
If you find yourself waking up in the middle of night and covered in sweat, that’s anxiety. The fear of the unknown that something bad can happen to us or our family is a raw primordial subconscious trigger that made us alert for predators at night when we were still living in caves.
The lurking predators are now extinct, but they are replaced with a new fear: the glowing eyes of unforeseen bad luck.
What if my job doesn’t hold out to let me take the kids all the way to college? What if I can’t finish my housing mortgage in this erratic economy? What if any of us gives in to a serious illness soon? What if, heave forbids, something bad happens to me tomorrow?
With life savings, these questions lose some of their sting.
While we can’t do much about the chances of accidents and illnesses, we can have some savings to back us up and shut those eyes glowing in the dark for a goodnight sleep.
2. Cash during life emergencies
It was an ordinary day for Janet, a sales clerk, walking along 8th street in Manhattan. A ring set her in an unconscious, almost automatic mode, picking up her phone to answer. Her boss was giving some instructions when Janet didn’t realize she was crossing a street with a blind spot on her left. The car threw her a good three meters away and Janet was hospitalized for a week for a broken shoulder. It would take her a few months for the rehab.
The psychological trauma of the impact had subsided, Janet was glad to have enough savings to dip into to cover her physical therapy, which was excluded in her hospital insurance. A few months after, she’s back at work and mindful that cellphones and crossing streets don’t mix.
Accidents happen. You have 1 in 303 chance of figuring in a car accident and 1 in 171 falling to your death, according to the National Safety Council. But if you’re worried about falling objects from the sky, NASA said you’re likely to be hit by lightning twice than by a crashing satellite. The point is anything can and will happen once you set foot out of your doorstep.
Moreover, unforeseen illnesses are worse. Americans on the average have 1 in 5 chance of getting a sudden heart attack, 1 in 7 of developing a cancer and 1 in 24 of suffering a stroke.
Insurance helps to cover the major expenses in an emergency. The car repair, the hospital room, the medical bills. But insurance companies love to spring a surprise on you. Some don’t cover therapy, as in Janet’s case. Out-of-network costs can be excluded, too, such as the specialist, emergency facilities used, or the hospital where you’ve been confined.
Your car may be covered. What of your laptop or other valuables that are crushed inside? Some insurers also deny claims if you have lent the keys to a reckless driver who is living with you. And your car insurance may not be enough for some motor vehicles, such as RVs, motorcycles, motor homes and collector vehicles, which may need a specialized policy.
With a substantial life savings, you’re ready for surprises even in emergencies.
3. Happier marriage
Counselors agree that having a common goal and ambition is one key to a happy marriage. But how many married couples really know their partner’s aspirations?
Building a life savings is a good way to open both your closet of dreams and pave way for a mutual respect.
Life savings are not just life savers; they are dream catchers, too.
We save so we can enjoy a Mediterranean tour one day. We save so we can upgrade the Honda to a Volvo. We save because we want to put the kid in an Ivy League school.
Life savings helps us aspire to bigger things in life. It’s likely the same feeling running through your mind as you slid the ring on your partner’s finger years ago.
Danica and Robert left a three-bedroom penthouse in Chicago for a single-bedroom apartment four years ago, but they couldn’t be happier. Because they saw the future, not the present. The savings they’ve been making for years now on the rent will jumpstart their housing mortgage soon, a sprawling five-bedroom in Naperville’s posh suburbia.
It’s the same goal-setting fulfillment felt by Josh and Gigi when they gave up a Mercedes to get Gigi in a post-graduate program. The couple knows Gigi is set for a higher paying career in the future.
Building a life savings doesn’t only accumulate wealth; but also a positive mutual feeling between you and your partner in sickness and health, so to speak.
4. Safety net to continue a healthy lifestyle
Let’s face it. Living healthy comes with a cost. Organic foods are more expensive. Access to farmers’ markets means living in the suburbs where the mortgage is higher. While there are cheaper ways to exercise, gym and yoga classes are still the preferred way and they add to the monthly bills. Supplements mean extra food expenses. Even eating out in specialist restaurant that offer a healthy menu may mean driving an extra mile.
In fact, obesity and poverty are found to be correlated. A study by the Food Research and Action Center showed that inner communities often lack access to full-service groceries and markets that sell fresh produce, whole grains and other healthy, organic products. Instead, low-income families depend on the neighborhood convenience store that stacks up on junk, processed and canned goods and less on the healthy stuff.
Indeed, wealth is health and when faced with a sudden job loss, your family’s health is put in line.
It shouldn’t be if you have enough life savings to bridge the gap to your next job. That means your children won’t skip on organic cereals, fresh produce and milk. You continue with your gym workout every other day, while your partner can still go to the yoga class.
Sweating it out, in fact, is a good way to ease the tension during these low times. That’s every penny off the membership fee working for you to help you clear the mind and think of your next move.
Moreover, an ounce of prevention may be worth a pound of cure, but without an income, even that ounce is expensive. But with extra cash, you need not skip the regular trips to the doctor or dentist.
5. Get back your wits
Savings allow you to keep a healthy work perspective.
Danny had been working even on weekends to produce nonstop content for a media company. With stakes higher now for publishing companies to create new content every minute, Danny would even use up his holidays to reach his deadlines. Danny started feeling like Sisyphus, the king in Greek mythology condemned to roll a boulder up a hill, watch it roll back down and repeat the process for eternity.
With work scarce these days, he had clocked in for a job that operates on a no-work, no-pay policy. Sure he could take a break; but he’d fall short on the next month’s budget. Danny needed a break, but he also needed to keep earning.
Rather than lose his wits, he filed for a week of sabbatical. He just stayed home and enjoyed the break, while knowing his savings could fill in the gap of a week’s pay.
The work and sick leaves notwithstanding, sometimes it just hit us. We need to escape being Sisyphus if only to save our wits. In times like this, it pays to have some cash tucked away somewhere to regain our perspective in life.
You don’t need to take a sabbatical to keep your wits. A good way to balance work and the pursuit of happiness is to get a hobby.
Get into a painting class. Learn a musical instrument. Join a cycling competition or marathon with a long-term target. Following your passion can help bring back a sense of value in your life, even as you do the same work every day.
With enough savings you can pursue your passion and be happy, even if it means being a happy Sisyphus.
6. Keep your health
Life savings often mean building a nest egg. But sometimes, retirement comes unexpectedly early. Like when our health is compromised.
John’s nest egg consists of his IRA, life insurance and a time deposit. The forty-three year old has also enough cash in the bank. He planned to retire by sixty, but life had other plan for him.
One morning he woke up feeling a little twitch in his fingers. In just weeks, the twitch became a jerk and the jerk progressed into an involuntary shake.
John got Parkinson’s. He was on its middle stages. He needed to retire to focus on treatment and therapy.
His nest egg intact and solid, John opted to meet this new challenge in his life without having to worry of working every day. It’s a small win in his bigger battle ahead, but a win nonetheless.
Jessica, on the other hand, knew she had to spend more time with her six-year old when doctors told her the child had leukemia and was not expected to live to see her eighth birthday. Jessica quit her job to be a fulltime mom. Every day counts, she thought. She could always come out of retirement in the future, but she knew she had only one shot to see her child grow every single day.
Her child is nine years old now, and Jessica is still making life count for both of them: cooking for her meals, playing at the park, waiting for her at school, clowning around the dinner table; things she would have no time had she been hooked on her marketing job today.
When life forces us into retirement, life savings allow us to accept it gracefully.
7. Keep a positive outlook in life
Life savings gives you a sense of control in an otherwise unpredictable economy that is saddled with partisan politics and social imbalance.
You may feel helpless seeing our economy rise and fall amidst the threat of emerging markets. You may harbor disgust over the growing gap between the rich and middle class. There are a lot of things that you feel powerless to influence.
With a solid life savings, you can still choose how to live life. In fact, the mere act of saving money is your biggest win to wrest control back to your life.
Taming your spending cravings is a big step forward; the pleasure is not in accumulating more wealth, but in defeating the big advertisers, the “evil” commercialism culture that permeates our world today. It’s nothing short of reaching in to your inner Zen and finding peace knowing that you are on top of your life.
Control also means choice. You can opt to help someone, a charity or a relative in need. A deep-rooted empathy to the less privileged creates a positive frame of mind that a bigger world exists outside your home and you want to be a solution, not a problem.
It may be unfounded, but the law of karma dictates that when you give, you attract more blessings in life. People who help people tend to be happier. And there’s a self-serving side to giving.
In his best-selling book, “Influence: The Psychology of Persuasion,” marketing expert Robert Cialdini said reciprocity compels the receiver of goodwill to return the favor. It’s a side benefit you should welcome.
Furthermore, life savings can also act as seed money for the bigger pie. Although it’s not recommended to burn your savings in one investment channel, extra cash means you can play in a rich man’s game: stocks, bonds and other equities. You can also set up a small business partnership to further expand your income horizon in the future.
The key is to keep on building your life savings as you keep investing a portion of it for bigger returns. Then you can plow back some more into your nest egg.
8. Avoid major life’s stress
Making major decisions is easier when you have a pool of fund to turn to other than your regular pay.
Precy’s world went tumbling down when she discovered her husband was cheating on her. Her husband begged for her to stay, but she knew she would never find peace living in a marriage with cracks all over it. She needed to move out.
Precy took the step of what she believed would make life more bearable for her. She had enough money saved to take her to a new house and into a new chapter in her life.
When you can no longer stand the heat in the kitchen, extra cash lets you get some air to breathe elsewhere and life moves on, hopefully, for the better.
Not only does life savings can help you move out of a souring marriage, it can help you leave a job gone sour, too.
Dave hated his job. He signed up for a junior marketing position so he could work his way up to the senior levels in five years. But instead he found himself knocking on hospital doors and town halls to sell climate-change compliant incinerators. Two years of being bypassed in his sales department, he thought he had had enough selling garbage.
He wanted to find a “dream job” even if it costs him half a year of wandering. His savings would see him through his job-hunting days, he thought in confidence.
With a good pool of life savings, you also avoid loan penalties when you find yourself in the office chopping block. Ideally, your life savings can meet six months of amortization in advance in case you lose your job. That should be enough to get your bearings back and never miss a payment.
Did we convince you enough to start saving or better your life saving habit? The Employee Benefit Research Institute, a nonpartisan, nonprofit research organization based in Washington, D.C., said last year only 14% of Americans have enough savings to live a comfortable life.
Let’s prove it wrong this year.
Why is FinancesOnline free?
Leave a comment!