It’s not how much you earn, it’s how much you save

User Written by Carl Turner on May 15, 2014.

It’s not how much you earn, it’s how much you save

We’ve all been there: overhearing someone in a restaurant or at the golf course bragging about how much they earn. Besides the fact that I was always told that it was impolite to talk about earnings, these individuals are missing the point. It might not be a sexy topic of conversation but what’s really worth talking about is how much you save.

A person may earn $400,000 a year, but if he indulges in a luxury life of excess he has less sense than the guy who earns $100,000 but saves half of it away. Why? Because money spent is money lost. There is of course a balance to be struck here. I’m not suggesting that we all become scrooges, squirrelling away every last cent. If we work hard, we deserve some of life’s pleasures and spending money on them is not wrong, however I can not stress how crucial saving is in ensuring your financial wellbeing throughout your life.

The 19th century politician Henry Buckley summed it up with this spot-on quote: “Save a part of your income and begin now, for the man with surplus controls circumstances and the man without a surplus is controlled by circumstances”.

Unfortunately life is not predictable and when things go wrong it can get very tough very quickly. Those who get into the habit of saving grow their wealth year on year and use insurance to protect that wealth have a cushion to fall back on during tough times. If a critical illness stops them from working or if they unexpectedly lose their job they remain in control.

A savings habit is especially important as our life expectancy increases. Today’s 20 somethings have a 23% chance of becoming centenarians. If they retire at 60, that’s a very long time during which they will need to support themselves. Building up a healthy savings pot is essential to avoid poverty in old age and maintain a comfortable standard of living.

The people I see who blow all their cash on cars and holidays they cannot afford may be living life to the full now but they are also taking a huge risk on their financial future, sacrificing long term security for instant gratification. What would happen to them if they were left unable to work, or lost their jobs? Having no savings leaves people at the total mercy of circumstances later in life and all too often it is not kind.

Whether you’re a flash Harry or an ordinary Joe, my advice to you is to develop a savings habit. Regular savings plans can be tailored to your requirements whether you earn $50,000 or £500,000. Ultimately it saving puts you in control and makes you the master over circumstance.

Carl Turner

Carl Turner

Posted on May 15, 2014 in Savings.