Columns for families based on the book “It Can Be Done” @studentsleadusa
Saving money and avoiding debt is another topic big enough for two columns. This first column will cover why people should try to save money and avoid debt. Next week’s column will explain why it’s important for the country to do the same. Saving money and avoiding debt is one of the most important issues faced by families and our country.
Most of us already know it’s difficult to save money. It doesn’t get any easier once we have families of our own. There will always be something we or someone in our family wants to buy which we don’t absolutely need. There will always be a vacation we would love to take right now that costs too much. It’s hard to say “no” to people we love, and to ourselves.
Why save money? In the future, when we have our own families, we will want to be able to provide for them. We will want to be able to pay our own way, as one of our obligations to ourselves, our families, and to society. Saving and investing about $2 a day can make us millionaires by age 65, but without savings, it’s difficult to become independent.
Three important things happen in life which should make every American want to save. First, emergencies happen. Our car might break down or we could have an accident or injury. With savings, we can pay our share of the costs to fix the damage or get the care we need. Without savings, we might be in crisis mode when unexpected things occur in life.
Second, nobody has a guaranteed job which lasts forever. With so many different businesses, some of them fail. They reduce their number of workers, or they could even decide they want someone else to do our jobs. We might not get a new job immediately, but if we have saved enough to live on for many months, losing the job probably won’t feel like such a catastrophe. In this way, saving helps us cope with life’s downturns.
Third, we may feel young now, but we won’t work forever. We’ll need to save money to build a retirement fund. With good health, we will live to be eighty years old or even older. We’ll “retire” at some point and when we do, we will probably have to live mostly off our savings. If we save when we’re young and keep saving, we will have money for retirement.
The fun of trying to buy everything we want will never outweigh the stress and worry we will feel with lots of debt. In a household, too much debt can create quiet (and sometimes not so quiet) desperation and conflict, robbing a person of joy. Plus, a person who’s worrying all the time about paying back high debts probably won’t be focused on life’s next big opportunity.
Unfortunately, debt can lead to more debt because of “interest.” People aren’t going to loan us money for free. They charge interest, which means we pay back what we borrow, plus an additional amount to the lender for interest. Paying the bills later, including interest, will feel lousy when compared with the temporary, good feeling of buying an item we didn’t really need in the first place.
Too much unpaid debt can also lead to bankruptcy. Bankruptcy can eliminate most of our debt, but it puts a black mark on our history and record. People won’t want to loan us money in the future. Plus, we bought things from people and they worked hard to provide them. With bankruptcy, we don’t end up paying for the things we bought, which is wrong. Yes, sometimes filing bankruptcy is necessary, but it shouldn’t be taken lightly.
In life, it’s best to think about debt as something to avoid if possible.
It’s best to think about savings as a goal for our present and future.
With this approach, we will help set the stage for ourselves and our future families to live exceptional lives.
Join us next week when we further explore the importance of saving money and avoiding debt for our country. Frost Brown Todd LLC Member Rob Hudson is a Past Chair of the Northern Kentucky Chamber and a recipient of its Frontiersman Award. 2018 Independent Author of the Year Lauren Hudson is a Singletary Scholar at the University of Kentucky.
