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Saving Money

Saving Money – Is It Really Necessary?

Saving money was one topic we discussed at a recent Q&A session with a group of young twenty-somethings. They had loads of questions based on their frustrations with money and I had a question for them too.

Me:        What do you know about managing money?

Them:   That we should save it.

Me:        And why should you save it?

Them:   *crickets chirping* *shoulders shrugging*


What’s your answer?  Saving money is age old wisdom isn’t it?  There’s something about saving 10% of what we earn isn’t there?


Saving Money – My Answer

There are only three reasons for saving money.

1. To be able to pay for expected periodic expenses (such as car registration, or the electricity bill) and those expected (if we’re smart) unexpected expenses (such as the car  breaking down and needing a mechanic, or our mobile phone dropping into the toilet  AGAIN and needing replacing.)

2. A special project, such as travel overseas, or a new car, or a big party.

3. A rainy day.  What this really means is being out of work for some reason. And we might need a bit of a buffer to tide us over while we find another job. Or… if we’re a business owner with variable revenue we might need to dip into that rainy day buffer when things are a bit thin.

Yep.  That’s it. That’s all we need to be saving money for.

After all, money is for spending isn’t it?  What is the point of hoarding it for no reason?


You know there’s a catch don’t you?  But what is it?


The Other Thing

What we don’t hear as often is that we also need to INVEST money.

What does this mean?

It means putting our money somewhere where we will get it back at some stage, with extra money as well.  (The extra is called the Return On Investment – or ROI.)  And not only that, while it’s out there, it can be generating an income for us.

Why do we need to do this?

Because we would otherwise have to work all of our lives.

Now as much as we might love our work and figure that we’ll take that plan, there are a few things that typically happen to people during the journey of life that mess with that plan.


  • Our work can dry up with changing or challenging economic times.
  • We (or a dependent one) can suffer illness or injury that prevents us working.
  • We may lose capacity as we get older and not be able to contribute as well as we did when we were younger.
  • We may cease to love our work for some reason.  (Change is one of the only constants in life!)
  • We may decide at some stage that there’s a lot of other things we’d like to experience or do, apart from our work. (Like raising children, charitable work, artistic endeavours, or even just relaxing and having more fun and less work related pressure.)


This is where that 10% rule you may have heard of applies.  Except that it isn’t 10%; I’ve run some calculations, and it’s actually 15% that we need to keep and invest, to grow over time.

Then – when we either work less or not at all for some reason, that investment of money will pay us an income, instead of us having to work for it.

Sound good?  It is.  Imagine waking up and doing what YOU want to do for the day, knowing that money is flowing into your bank accounts from your investment returns, regardless of what you do.

Why we don’t do it.

Many of us are so busy dealing with the present that we don’t ponder the future.  And one key to successful investing is to have a well-formed desire for one’s future.

Also – in Australia we assume we’ll be looked after if we can’t work for some reason, by the government, via a pension or allowance. And for workers, there is also our superannuation. We assume we’ll be ok.

Our system here is very supportive when we can’t work or are over a certain age and choose to retire. However what many of us don’t realise is that the system of pensions or allowances keeps us alive with a lowish level of comfort AND THAT’S IT.  We won’t die, but we’ll be barely above the poverty line.  With longer life expectancies these days, this is not a pretty picture….

And even if we do have an idea that maybe we should be investing some of our money, we’re either struggling to find any left over to invest, or we don’t know how to get started.

Some Good News

Investing is not difficult.  It just requires some know how. We don’t learn it at school or university because it is not a skill that needs to appear on a resume, in order for us to get a job.

Some people launch into investing without education, and learn by trial and error.  This can be a very expensive lesson. The smarter option is to invest in some education and coaching first, to avoid those very expensive lessons.

So in conclusion, saving money is important – but not for the reasons usually assumed.  Investing money is vital if we want a future of thriving rather than just surviving.

Would you like to get started with investing?  If so, I can help you. We can have a short chat where you let me know your thoughts, and I’ll let you know your possible next steps with me.  Email me if you’d like to have this conversation.

Wishing you a Fabulous Future,





2 thoughts on “Saving Money – Is It Really Necessary?

  1. I agree – saving money only takes us so far and is subject to inflation anyway if it’s just sitting in the bank. Investing and making the money work for us is far more effective and as you mentioned gives us opportunities to pursue interests other than having to go to work each day.

    1. Thanks Rochelle. Yes When inflation is above our bank interest rate (which it usually is), we are actually losing value while our money just sits in the bank! At the very least it’s good to park our wealth money somewhere where it earns more than the inflation rate! Cheers, Glenda

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