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Saving

Saving money is an essential part of managing your finances. It provides a safety net in case of emergencies and helps you achieve your financial goals. Learn not to live paycheck-to-paycheck.

The fable of "The Ant and the Grasshopper" is one of Aesop's most cherished and well-known tales. It conveys a profound lesson about the virtues of hard work, foresight, and preparation versus the perils of idleness and short-term gratification.

“A penny saved is a penny earned”
-- George Herbert (original)

An emergency fund is money set aside for unexpected expenses like medical bills, car repairs, or job loss. Aim to save at least three to six months’ worth of living expenses in your emergency fund.

"Save for a rainy day"
-- Aesop

Set up automatic transfers from your checking account to your savings account. This ensures that you save consistently without having to think about it each month.

Create separate savings accounts for specific goals, such as a vacation fund, home down payment, or education fund. This helps you stay organized and focused on your objectives.

“A simple fact that is hard to learn is that the time to save money is when you have some.”
-- Joe Moore

There are several options available for where to keep your savings. Some are better than others.

Bad: Saving money in your “mattress” is typically a bad idea. It will not grow to combat inflation and will become worth less over time. While it is a good idea to keep some emergency cash available in the event of a natural disaster where infrastructure services may become unavailable for days or weeks is reasonable, but keeping $20,000 cash for a long period of time is generally not a good idea.

Good: Use a savings account, the money is still readily available, but it can also earn 1-2% interest.

Better: Use a high yield saving account which may pay 3-5% interest. Also, Certificate of Deposit (CD) products may work if you can deal with the lockup period for your money. This usually locks your money up for 6 months to 5 years and pays 3-6% interest.

Best: Invest the money in an IRA, Annuity or other long-term product. The interest rate is higher than most other options.

“Do not save what is left after spending; instead spend what is left after saving”
-- Warren Buffett

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