By: Diana Myrie

I can remember growing up and hearing the words “save for a “rainy day” but never realized the real meaning or importance of the phrase until I had to manage my own finances as an adult. Fast forward to present day and, as I find myself living in a new country and working as a Financial Advisor, I am even more hard-pressed to encourage this practice of setting up an emergency savings fund because it is so integral to a person’s financial well-being. In an age of instant gratification and credit, it is so easy to forget about saving for the future and planning for retirement or that dream vacation.

Even though I did not know it at the time, the idea of saving for a “rainy day” instilled in me the importance of saving for the unexpected. These days, we live in a credit-driven world and if you are not careful with how you handle credit, before you know it, you may dig yourself into a hole of debt so deep that it literally could take you and your dependents an entire lifetime to get out. Unfortunately, there are some who never ever recover and ultimately are swept up in the tide of endless bills and constant calls from debt collectors.

Useful Saving Strategies
In order to help persons to avoid getting into this trap, it is important to first understand that building a solid financial foundation starts with establishing the good habit of saving.

Here are the strategies:
• “Pay yourself first” is a useful way to help take the stress out of saving. This may take the form of pre-authorized contributions to a savings and/or investment account at a reputable financial institution that works for you. By doing this you benefit from compounding, which causes the value of your deposits to quickly multiply over time.
• Purchase assets such as property and mutual funds to name a few, which can appreciate in value and help to boost savings.

The Benefits of Saving
There are several benefits to saving, amongst these are:

• Financial Stability– Banks and other financial institutions tend to look more favorably on individuals who demonstrate that they are good at handling their finances based on their savings and spending habits. For instance, someone who is focused on building wealth by saving and investing in stocks, bonds and property may be more likely to be approved for a loan or credit than someone who is tends to carry a high credit card balance, with spending on items which do not appreciate in value and who may have poor payment history. Persons who don’t have to worry about money are considered to be financially secure.
• Being financially prepared – As a child growing up, I owned a piggy bank, which I would use to save up for something special or just simply to save. It left me feeling a sense of accomplishment, especially when I put that last coin or dollar in knowing it brought me closer to my goal. I have encountered unexpected expenses and because I knew I had money saved up, I felt relieved knowing I did not have to ask my parents for help. The piggy bank was a fun tool that my parents used to instill in me the value and importance of saving. I also recall my father constantly telling me no matter how much money I earn that I should always set aside something towards savings. He would say “for every dollar you earn, try to save at least 10%!” And to this day, this advice has stayed with me. That is why I try to use any opportunity to remind parents that it is never too early to teach our children the value of saving. It is also my opinion that financial planning should be part of the school curriculum, as I believe it will help to ensure that the future of our financial health is positively impacted from a very early age which may have a more lasting effect.
• Peace of Mind comes from knowing that you are debt free or financially independent. Savings built up over time allows you to be more confident in your financial planning. Warren Buffet, one of the wealthiest persons in the world advised that if you can’t pay for it don’t buy it and if you can avoid getting into credit card debt then you will be financially better off. Oprah, who is world renown for her highly successful businesses also advises that when you keep a close eye on your finances and you know where every cent goes, helps to also keep your finances on track.

The importance of Seeking Professional Financial Advice
I believe it is necessary to employ the services of an expert, whether you are just starting out or have found yourself struggling. In case you are wondering “what if I do not have an emergency fund already set up” or you may be in so much debt that saving seems near impossible, then it may be best to seek the advice of a financial advisor or credit counsellor. A Financial professional may be likened to a medical practitioner, the only difference is that he/she is focused on your overall financial health.

Depending on the financial problem, the financial advisor may provide a financial plan or solution, which may take the form of debt consolidation in order to “free up” disposable income. The remedy recommended should be geared towards helping to promote a more stable financial outcome, which in turn will help to generate savings.

It is my hope that you will be more inclined, if you were not already, to focus on saving for a “rainy day” and to ensure that you pay yourself first as a means of starting the process. After all, saving is crucial to your overall financial well being, which ultimately can lead to a more positive relationship with your finances. Tools such as pre-authorized contributions, make saving less stressful because it is automatic. Once saving becomes automatic it will become consistent. Before you know it, you will have saved more than you thought you could, which should be your ultimate goal.

Diana is a Registered Retirement Consultant and Life & Wealth Coach with a passion for helping individuals achieve financial success!