Some one asked “I don’t have money before a job so cannot spend and have fun. After finding a job I have money, but I am saving for a future. So again I cannot spend. What is meaning of money? Spend it or save it or what to do?”. That got me thinking. I gave them the reply and thought I should expand a bit on my blog so it might help others.
I understand the desire to spend after you get your first job. Obviously you don’t have to start saving the minute you have a job. May be enjoy for a few months. Buy all the small things that will give you happiness. For all the big ticket items you need a financial plan. Don’t save everything that you earn. Keep something for entertainment, but only after expenses and saving. You need a plan for that too. The point is not to save your entire life and then die without ever having a chance to enjoy it. You are saving for your future. Consider these cases.
Losing your job
In today’s corporate world losing a job happens in a moments notice. It could be because of cost cutting, company going bankrupt, poor performance at your job, shutting down of the project you were working on, economic downturn, losing to your company’s competitor, technology going out of vogue and so on. So if you lose your job, you will have your savings to help you out until you find the next job.
In case of emergencies
Suppose you did not lose your job until you retire. Then your savings can help in case of emergencies. Emergencies always come unannounced. So you cannot really plan for every kind of emergency. If something unexpected happens to you or your loved ones, the savings will help you.
Help your family
Your life can take many alternate paths. One of those paths could be early death. No one can predict the future and death is an eventuality. If you were to die early, your savings in addition to your insurance will be a big help to your family. So don’t underestimate the power of savings.
While there is no retirement age if you really want to work, there is a possibility that you may not be able to find work or may not be able to work. Don’t assume that you will be fit for ever and will be able to take on the challenges of work till death. Age will catch up. And there will be young people who can work longer, faster and harder than you can and require much less salary to keep them happy. At that point, your savings will come to your rescue.
Lets assume that somehow your savings were able to navigate all the above hurdles without being spent. Then, if you believe you have saved up enough then you can retire early and spend the savings. That’ll be a nice possibility, wouldn’t you agree? And if you prefer to keep working, then spend away everything above and beyond your retirement kitty as your heart pleases.