Saving is a never-ending habit—like making healthy eating choices or building routine exercise into your lifestyle. And just like those last two admirable life goals, even trying to start saving can scare many people. If you think of saving as an undesirable chore, it will always be one. If you see saving as paying your future self, giving yourself options, and lifting the burden of living paycheck to paycheck and fearing financial collapse, you will have already conquered the first challenge of finding the motivation to start.


There are immediate and longer-term benefits to the habit of saving. Some you might be able to think of right off the top of your head, others might be new. It can be helpful to have a list like this handy when you’re feeling demotivated, or feeling tempted to spend money you could be saving, or told by a friend that saving is a pipe dream and you should just live for right now.

  • Financial security – You’ll be able to weather a financial emergency.
  • Take advantage of opportunities – If you have money in the bank, that means you can take advantage of deals and make sure you’re getting the best price—say when you need to replace a car or your water heater—before it becomes an emergency.
  • Cut back on reckless spending – Saving forces you to prioritize how you spend your money and rethink what has the most value to you.
  • Rely less on credit – If you use a credit card or a risky payday loan to help you out of an emergency, you’ll be paying high interest rates on that borrowed money—and that’s money you probably can’t afford to pay, so you’re not in much of a better situation in the end.
  • Generates interest–If you put money, no matter how small, into a savings account at your local credit union, it will start earning you interest.
  • Protects your assets – To pay for an emergency, you can use your funds in your savings rather than having to sell your car, your furniture, or your house.

Saving vs paying down debt

In the ideal scenario, you would be able to save money and quickly pay down your debts at the same time. But many people can’t find the cash in their budget to do both aggressively, at first. So which should you focus on?

Always pay the minimum on your debt balances. This prevents you from having to pay late fees, having the interest rate increased on credit cards, and having your credit score damaged.

If you can do this and have cash left over in your budget, start saving. Aim to save at least $500, or $1,000 if you have a family. Then put that money each month you were saving to pay off debts, starting with the highest interest rate debts. If you have credit card balances or loans with high, double-digit interest rates, consider only saving the $500 and then aggressively paying off that debt.

The sooner you pay off those debts, the sooner that money is freed up to be saved.

Saving vs investing

Saving really is investing in you and your potential future needs. What makes it different from the wealth tool of investing in, say, the stock market is that your money in a savings account is easily accessible and good to use for short- to medium-term needs (saving for a new car, a vacation, an upgrade to your house).

Investing is the process of taking money to buy an asset that has the potential to generate a higher rate of return over the long term—greater than 10 years. Investments do have the appeal of a higher return (paying you more in interest), but they are also riskier and in the short term you could lose the money and not have it for an emergency.

How much to save

We already mentioned you should shoot for an initial saving of $500. From there, most financial experts suggest having between six weeks’ and six months’ salary in a basic savings account or CD/Share Certificate. Whether you choose to save seven weeks’ or 4.5 months’ salary all depends on your life circumstances. The more expenses you have—mortgage, small business, children, loans—the more you need to have saved. This ensures you’re financially secure should the worst emergency happen—you lose your job.

The great thing is, even if you think you should shoot for six months, you can start by saving just $10 or $25 a month and then grow that habit as you’re able.

Calculate what you can start saving now

  • Step one: Record your current expenses. That includes fixed expenses like loans, utility bills, credit card bills, medical bills, and insurance; necessary but flexible expenses like food, gas, clothing, school supplies, and personal hygiene.
  • Step two: Write down how much you make each month, then subtract your expenses from that income. There are many free budgeting calculators online to help you with this.
  • Step three: Make sure all bills and basic expenses are met or make a plan to make sure they are (finding another job or cutting way back on discretionary spending, like entertainment).
  • Step four: If you can pay all of your basic expenses, put every extra dollar into savings—and even find ways to cut back on spending so you can grow your savings nest egg as fast as possible.

Make saving easy

Automating your saving is the easiest way to make it a habit you don’t have to think about. Set up a direct deposit from your checking to savings account. Make a game of seeing how much you can save each month.

Every effort you put into saving today, instead of waiting until later, pays you back. In the best way.

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