You squirrel away a little bit of cash each month, but is it enough?
Well, if you’re only dropping pennies into your piggy bank, and your automatic contributions happen once in a blue moon, it might not be.
Like many people, you probably need to save more. But if you still don’t believe it, here are three signs your savings could use a big boost.
- You can’t take any time off work
When was the last time you took a vacation? Or better yet, when was the last time you took a sick day?
If it’s been a while, there could be two reasons why you’re chained to your desk:
You’re a workaholic who loves the grind
You just don’t have the money to spare a single day without pay.
Most people identify with the latter. In all likelihood, so do you.
If you don’t get paid vacation or sick days, any day you’re away from work costs you money. And if you don’t have enough savings to offset this loss, you may not be able to pay the bills — which is why you force yourself to go to work in sickness and in health.
- You don’t have an emergency fund
Some people think they’re in a good financial position as long as they’re paying their bills without any problems. While paying monthly responsibilities on time is one trait of good money management, it’s by far the only proof of healthy finances.
Without savings, any bill, repair, or medical issue that falls outside of your normal expenses would pose a challenge.
If you’re lucky, you can postpone these bills until you have the money to cover them. But real life rarely works that way — in most cases, you’ll be expected to pay your dues by the deadline.
At least, in an emergency, there are lines of credit and installment loans that you could use to pay for these expenses.
Mainstream banks offering these loans can take some time to process your application, which doesn’t work when you have pressing bills that need to be paid yesterday. Luckily, new options for borrowing money are available online that work on a faster timeline. Online lenders remove most of the typical red tape slowing down personal loans, so you can receive an installment loan by the next business day after you’re approved.
An expedited timeline means you can get help in a pinch. But if you rely on these online loans and personal lines of credit every time something unexpected comes your way, then you don’t have enough in your emergency fund.
Most financial advisors recommend saving the equivalent to six months of expenses in a rainy-day fund, but there’s no limit. The more you have in your savings, the more prepared you’ll be should several emergencies happen in quick succession.
- You don’t have a retirement plan
Don’t think you’re out of the woods just because you could cover the cost of taking your car in for some unexpected work. Financial stability involves looking beyond your immediate needs to help with long-term goals like retirement.
Some financial experts say you need at least one million dollars saved to retire comfortably. However, this figure is constantly changing as inflation and other factors affect the economy.
If you don’t have a plan in place for your eventual retirement, you might not be able to afford to stop working by the time you reach 65.
Working well past the age of 65 can be a depressing thought if you don’t love what you do. Unfortunately, it could be an accurate prediction of your future if you don’t start saving soon.
So how did you do?
Did all of these signs resonate with you? It doesn’t matter if it’s just one that struck a chord — if you saw a bit of yourself in this list, it’s time to look at how you can save more money.
A budget will be your most valuable tool, as it can help you cover your bills and squirrel away some extra cash for a sick day, emergency repair, or your golden years. It may take some time and effort to get used to following a budget, but don’t let that intimidate you. All that hard work will be worth it when you have a safety net of savings.