There is no doubt that debt brings with it stress; not just the social stigma of facing the ultimate fiscal defeat, bankruptcy, but even a day to day worry about how bills are going to be met – where the money is going to come from for the mortgage, the food, the utilities, the car – a balanced budget that pays off the fixed costs, pays a fixed amount to savings and leaves the rest for variable costs is the path to lifelong financial stability.
Many people worry that for them, it is unattainable; it is not. A couple saving $250 a month between them (not even each) for 35 years at 2% interest will end up with over $150,000 in their savings accounts– enough to buy (or at least get a mortgage for) that dream retirement home, or an expensive car or take a trip together around the world. And the best thing is, they don’t need to win the lottery to do it! A new adult of 21 whose parents put away $50 a month in a 5% child savings account gets to make plans to go to university with $22,300 toward the cost of their tuition. Suddenly student debt does not look so daunting.
As we grow older, year by year, and our family gets bigger decade by decade, it is a very satisfying feeling to be able to decide to do something just because one wants to do it; a savings fund can make this into a reality. It’s not a get rich quick idea, but it’s not a scenario that is possible to lose either, as long as one sticks to saving and isn’t tempted by other influences.
If health fails or in the event of accidents, it is an additional barrier against poverty and against losing everything a couple make have worked for years if not decades to build. And unlike the stock exchange and risky investments there is no outside influence short of the bank failing altogether that can reduce the value of savings.
Savings make it more unlikely that a couple will get into debt in the future. Credit cards at around 20% interest are much harder to rid oneself of and both Visa and Mastercard make available pre-paid debit cards for those who want to have the flexibility of plastic that can be used anywhere without being landed with the interest that all too often accompanies such. Were there not a market for providing such cards not just to those with bad credit but for those who have decided that debt is for others, these companies would not produce debit cards; they do – they can see the market.
Living within your means should be everyone’s target, and savings add to a person’s means when calculating whether or not they can afford something they want. The financial crashes of 2006 through 2008 taught a harsh lesson to those who lived off credit and those who speculated recklessly on the stock exchange. There is always a price to be paid for credit, whereas those with savings feel more secure, worry less and have more time to enjoy life without counting every nickel and dime spent.
One of the biggest causes of marriages breaking up is financial worries. Constant arguments about finances lead to a less secure atmosphere for children, leading to them feeling less comfortable and secure about the homes they grow up in. This is a needless stress to put children under, when a little fiscal discipline combined with a solid plan and consistent saving can reduce and even eliminate the financial woes at the heart of arguments.
Children brought up in households where the financial security of savings is at the heart of fiscal policy themselves grow up to be fiscally responsible; what was a game in childhood, of saving that extra dollar, becomes an important part of planning for families of their own when they grow up.
We are a consumer society, but that does not need to depend on credit. A hard days work for a fair wage which is used for savings as well as for paying bills and living expenses, can lead to a family with just as many material possessions, but the advantage that they owe nothing to a bank or credit card company for their goods, and don’t have the shadow of repossession hanging over them.