Why do you save?

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KlangFool
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Why do you save?

Post by KlangFool » Sun Apr 16, 2017 1:28 pm

Folks,

Why do some people save aka LBYM and some don't? And, for those that saved, what motivate them? Please share your story and point of view.

In my case and as taught by my mother, I save because I want to be rich. There is a limit to a person's earning if he/she only exchange his labor with money. In order to be rich, a person has to use the money to make money aka invest. And, in order to invest, a person has to save in order to have the capital to invest.

What makes you save? Why do you save?

KlangFool

sport
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Re: Why do you save?

Post by sport » Sun Apr 16, 2017 1:37 pm

Another way to ask this question is "Why do you spend?". I don't spend money just because I have it. I spend it where and when I get the things I want and need. What is left after spending (and taxes :annoyed ) is savings.

Dottie57
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Re: Why do you save?

Post by Dottie57 » Sun Apr 16, 2017 1:43 pm

KlangFool wrote:Folks,

Why do some people save aka LBYM and some don't? And, for those that saved, what motivate them? Please share your story and point of view.

In my case and as taught by my mother, I save because I want to be rich. There is a limit to a person's earning if he/she only exchange his labor with money. In order to be rich, a person has to use the money to make money aka invest. And, in order to invest, a person has to save in order to have the capital to invest.

What makes you save? Why do you save?

KlangFool

I save because I was born with the savings gene. At 3 I had a piggy bank and stuffed my pennies in it. At 6 & 7 I saved for barbie doll costumes. Carried my dimes nickels and pennies to the store to purchase. Learned about saving and spending at that time.

KlangFool
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Re: Why do you save?

Post by KlangFool » Sun Apr 16, 2017 1:45 pm

sport wrote:Another way to ask this question is "Why do you spend?". I don't spend money just because I have it. I spend it where and when I get the things I want and need. What is left after spending (and taxes :annoyed ) is savings.
sport,

If I am interpreting your post correctly, in your case, savings is just something happened after all your spending.

There is another group of people like me which practice "Pay Yourself First". We save whatever amount that we decided and then spent the rest. In this case, spending is just something happened after all our savings.

KlangFool

sport
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Re: Why do you save?

Post by sport » Sun Apr 16, 2017 1:50 pm

KlangFool wrote:
sport wrote:Another way to ask this question is "Why do you spend?". I don't spend money just because I have it. I spend it where and when I get the things I want and need. What is left after spending (and taxes :annoyed ) is savings.
sport,

If I am interpreting your post correctly, in your case, savings is just something happened after all your spending.

There is another group of people like me which practice "Pay Yourself First". We save whatever amount that we decided and then spent the rest. In this case, spending is just something happened after all our savings.

KlangFool
No, you are not interpreting my post correctly. I have always "paid myself first". However, the amount I decide to save depends on how much I need to spend for needs and a reasonable amount of wants. The trick is to keep the amount of wants reasonable. In other words, don't have tastes that are too expensive compared to your income. Or, as the Bogleheads say, LBYM.

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digarei
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Re: Why do you save?

Post by digarei » Sun Apr 16, 2017 1:54 pm

.
Why do you save?
Security - I was able to retire early(ish) with a reduced pension because of my savings/investments. The pension serves as a floor for my expenses The investments are available should I need them or want them.

For now, I'm a 'retired accumulator'. :happy


KlangFool wrote:
I save because I want to be rich.
  • I don't want to be rich. I just don't want to be poor.
.
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Pinotage
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Re: Why do you save?

Post by Pinotage » Sun Apr 16, 2017 1:56 pm

KlangFool wrote: What makes you save? Why do you save?
DW and I save now in order to have more options in the future.

We are getting to a point where we may begin exercising some of those options.

KlangFool
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Re: Why do you save?

Post by KlangFool » Sun Apr 16, 2017 2:06 pm

sport wrote:
KlangFool wrote:
sport wrote:Another way to ask this question is "Why do you spend?". I don't spend money just because I have it. I spend it where and when I get the things I want and need. What is left after spending (and taxes :annoyed ) is savings.
sport,

If I am interpreting your post correctly, in your case, savings is just something happened after all your spending.

There is another group of people like me which practice "Pay Yourself First". We save whatever amount that we decided and then spent the rest. In this case, spending is just something happened after all our savings.

KlangFool
No, you are not interpreting my post correctly. I have always "paid myself first". However, the amount I decide to save depends on how much I need to spend for needs and a reasonable amount of wants. The trick is to keep the amount of wants reasonable. In other words, don't have tastes that are too expensive compared to your income. Or, as the Bogleheads say, LBYM.
sport,

Thank you for the clarification. If you won't mind, why do you save? Are the savings for future retirement? Or, it is just a habit?

KlangFool

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FrugalInvestor
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Re: Why do you save?

Post by FrugalInvestor » Sun Apr 16, 2017 2:14 pm

I saved when I was very young because I wanted to buy something that I couldn't immediately afford, like a bicycle.
I saved when I was a teenager for the same reason but then it was a car and the expenses that went with it.
I saved when I was college age to pay for my education.
I saved when I was working because I wanted to be free to use my time and energy as I see fit.
Now that I'm retired I don't save any longer but I'm careful about how I spend.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

sport
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Re: Why do you save?

Post by sport » Sun Apr 16, 2017 2:28 pm

KlangFool wrote:
sport wrote:
KlangFool wrote:
sport wrote:Another way to ask this question is "Why do you spend?". I don't spend money just because I have it. I spend it where and when I get the things I want and need. What is left after spending (and taxes :annoyed ) is savings.
sport,

If I am interpreting your post correctly, in your case, savings is just something happened after all your spending.

There is another group of people like me which practice "Pay Yourself First". We save whatever amount that we decided and then spent the rest. In this case, spending is just something happened after all our savings.

KlangFool
No, you are not interpreting my post correctly. I have always "paid myself first". However, the amount I decide to save depends on how much I need to spend for needs and a reasonable amount of wants. The trick is to keep the amount of wants reasonable. In other words, don't have tastes that are too expensive compared to your income. Or, as the Bogleheads say, LBYM.
sport,

Thank you for the clarification. If you won't mind, why do you save? Are the savings for future retirement? Or, it is just a habit?

KlangFool
Klang,
As I explained, saving is a byproduct of LBYM. My tastes are not too expensive. I do save for a car fund so I can pay cash for cars. I also saved for retirement. My earnings were never high. However, I saved and invested starting right out of college. Now, we have a very comfortable retirement and a very nice house. We also have the money to do pretty much as we please, enough to allow for unexpected needs, and hopefully bequests to our heirs.

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jesscj
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Re: Why do you save?

Post by jesscj » Sun Apr 16, 2017 2:30 pm

I've always been debit adverse I remember saving and opening my first savings account at a local bank when I was in 3rd/4th grade, I grew up in low income family, parents told me I could have whatever I want as long as I paid for it.

I've never carried a CC balance, I did finance cars when I was younger that was my down fall with money, then as I got into my mid 20's i felt like I should be saving more, I had a 401k since i was 21 but didn't really understand much about them just that I should be putting money in there. Then I started really getting interested in personal finance in late 20's and starting to figure out all the ins and outs of savings and investing.

So why do I save OPTIONS, i want OPTIONS I want to be able to someday have enough that I can say NO to work that I need right now and yes to anything else. Owing money to anyone has always made me feel uneasy, I hated owing money to financing cars, house, and CC that's why I've never carried a balance. So after my last car loan I said I'd never have one again that was 5 years ago, Im slowly working on the house and saving more than I ever have. So for me its freedom and options that are of my choosing.
"Gonna Make It"

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GerryL
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Re: Why do you save?

Post by GerryL » Sun Apr 16, 2017 2:35 pm

A lot of the responses above resonate with me and I'll add:

My parents taught me to budget and save to be able afford things I wanted. I saved for the future, although I don't know that I was thinking about retirement. Also, as a young single woman credit was never really an option. I sometimes wonder if easy acces to credit at an early age might have overcome my frugal/saving nature and led me to debt problems.

Gleops2
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Re: Why do you save?

Post by Gleops2 » Sun Apr 16, 2017 2:45 pm

The inevitable rainy day.

For "when" not for "if".

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linenfort
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Re: Why do you save?

Post by linenfort » Sun Apr 16, 2017 2:53 pm

I won't have a pension.
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Minot
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Re: Why do you save?

Post by Minot » Sun Apr 16, 2017 2:56 pm

I saved because I didn't want to have to worry about not having enough.

Now that I'm 80, I've concluded that I have somewhat more than enough, and have been loosening up on the spending a bit.

Liveware Problem
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Re: Why do you save?

Post by Liveware Problem » Sun Apr 16, 2017 3:02 pm

Security.
equiv-tech

ACM4297
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Re: Why do you save?

Post by ACM4297 » Sun Apr 16, 2017 3:22 pm

Options and Avoiding Parent's Mistakes

Options: I ensure that I allocate a large portion of my earnings to (1) investing, (2) savings, and (3) deferred spending*. This gives me more options (1) in the far future such as retirement, (2) in case of emergency, and (3) in the near future.

Avoiding: My parents destroyed their credit, had kids and got married too early, didn't prioritize education, and are struggling. So now at 20 I have excellent credit, I'm putting off kids until I'm completely financially stable and out of school, I'm pursing a bachelors and hope to go for a PhD, and I work while saving the vast majority of my earnings.

*I know this isn't a super commonly used term, but I feel the need to distinguish between savings and deferred spending. Savings are funds used for education, emergencies, etc. Deferred spending is for splurging, a new phone, upgrading a laptop, buying new instruments, etc. Accounting has taught me that I should treat deferred spending as an expenditure not an asset.

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abuss368
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Re: Why do you save?

Post by abuss368 » Sun Apr 16, 2017 3:23 pm

To some day sit back, relax, and retire. Hopefully becoming independently wealthy in the process.
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Ron Ronnerson
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Re: Why do you save?

Post by Ron Ronnerson » Sun Apr 16, 2017 4:36 pm

There are a variety of reasons. I see the power of compounding and it seems unwise not to save. Delaying gratification tends to be handsomely rewarded so I try to set aside what I can while also living fairly comfortably right now. I like the idea of spending money today but I also like the idea that if I don't spend it, it will allow me to spend more (hopefully a lot more) later.

Also, it provides security and options. I'm expecting a pension that should mostly cover my retirement expenses. I enjoy my job and don't wish to retire early. However, there are no guarantees. If the pension ends up being less than expected and/or retirement ends up being sooner than planned, it would be nice for the fall to be cushioned. If things do go according to plan, we'll just upgrade our lifestyle in the future.

It is also to meet long-term goals such as having money to make large purchases (college tuition for kid, cars, home maintenance and upgrades, etc.). Some things are expensive. If I don't save for them, I either can't have them or have to charge them onto a credit card and pay interest. Saving for them is a better option.

Snowjob
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Re: Why do you save?

Post by Snowjob » Sun Apr 16, 2017 4:40 pm

I suppose the specific goal (function of portfolio size etc) changes over time but the purpose of my savings is to replace income when sufficient employment is no longer attenable. No one really knows when that will be and considering risk of detachment from the workforce increases exponentially as we age it makes sense to rush to a sufficient level of savings as quickly as possible...

Those reasons for savings change as the portfolio grows but for me they roughly equate to the below --

1.) to avoid a life of destitution
2.) to obtain a life of modest means
3.) to obtain a comfortable early retirement

I think in generally one should work / save like crazy to reach stage 1... after that, everything is situational but I would focus more and more on consumption smoothing than anything else. I don't expect to ever fully attain the third stage, but hopefully will cross the second by mid/late 40's.

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Artsdoctor
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Re: Why do you save?

Post by Artsdoctor » Sun Apr 16, 2017 5:02 pm

Great question, Klang.

I was raised in the Midwest with a VERY strong sense of independence. "If you don't take care of yourself, no one's going to do it for you," was the mantra, more or less.

I don't have a pension and I'm not counting on an inheritance. I know what it's like to live paycheck to paycheck and I prefer having a cushion because it makes me feel safer and more secure. I know what it's like to have to do something that I don't want to do because of money, and I would prefer to not go back to that.

So in short, it's for security and independence.

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bengal22
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Re: Why do you save?

Post by bengal22 » Sun Apr 16, 2017 5:12 pm

The more you save the more you can spend.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

gator15
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Re: Why do you save?

Post by gator15 » Sun Apr 16, 2017 5:29 pm

I save to have options, to have flexibility. Saving over the years has relieved a lot of stress I once had. The fear I had of losing a job or not being able to address an emergency has dissipated as I've saved more money. It's a good feeling.

twins2012
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Re: Why do you save?

Post by twins2012 » Sun Apr 16, 2017 5:37 pm

Freedom > things. Why I save.

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whodidntante
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Re: Why do you save?

Post by whodidntante » Sun Apr 16, 2017 5:43 pm

I save because money is freedom.

GoldenFinch
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Re: Why do you save?

Post by GoldenFinch » Sun Apr 16, 2017 5:48 pm

Klangfool, I always enjoy your posts. I save because I am a perfectionist. I've done everything else I've set out to do. :happy Over saving is all that's left besides staying healthy and generally enjoying life.

WildBill
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Re: Why do you save?

Post by WildBill » Sun Apr 16, 2017 6:10 pm

Howdy

Growing up our family was very low income and due to this, and some parent's health problems we had a number of financial difficulties. The anxieties this caused and the constraints on choices made me determined to be financially independent so that my family and I would not repeat this experience.

And I did and we have not. :)

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

anoop
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Re: Why do you save?

Post by anoop » Sun Apr 16, 2017 6:13 pm

I save because parents fought about money all the time because of some poor financial decisions by the father. I didn't want to be like them.

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Fudgie
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Re: Why do you save?

Post by Fudgie » Sun Apr 16, 2017 6:17 pm

FREEDOM!!!!!!

BlackHat
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Re: Why do you save?

Post by BlackHat » Sun Apr 16, 2017 6:38 pm

I have a few reasons for saving. I save because I enjoy it and I save so I can create a multi generational wealth. I want my future family after I'm gone too look at my picture and say, "BlackHat is why we can live comfortably." My only worry is that my money will be squandered. Hopefully they will be frugal and financially literate. Man, imagine being the source of a dynasty of wealthy people. It all starts with one person. I also save for my future financial security aka retirement.

This is the statistic that has me a bit freaked out : Research shows that in most families, 70% of inherited wealth is lost by the second generation and 90% by the third.
“Life is really simple, but we insist on making it complicated.” -- Confucius

amitb00
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Re: Why do you save?

Post by amitb00 » Sun Apr 16, 2017 6:40 pm

To make me Financial Independent. Also saving for goals like college education for the kids.

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LadyGeek
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Re: Why do you save?

Post by LadyGeek » Sun Apr 16, 2017 7:04 pm

This thread has run its course and is locked (not personal nor actionable). General comment threads are off topic in the forums with "Personal" in the title. See: A reminder that non-investing general comment threads are OT
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