We live in a first-world country: most of our basic human needs are easily satisfied. But take a moment to think about poor countries, where people live without plumbing, heat, or even food and clean water.  The average American’s issues fall into a few categories: health, safety, relationships and money. I will focus on one issue, money.  I’ve heard the saying “money does not bring happiness”, but to some extent, it does. Our quality of life is expensive. We work to pay expenses, and hopefully to have something saved for a rainy day.  But how can we save more money?

American families do not save enough

According to a 2018 report from the Pew Research Center, 52% of American households were considered middle-class. The median income of middle-class households was $78,442 in 2016.  Most of these families are fully capable of living comfortable lives. Thanks to credit cards and loans, they can make large or numerous purchases today, and pay for them as they earn their steady income.

If we need a car, we usually don’t have to save enough money to pay for it; we get a loan with monthly payments which, hopefully, are within our means.

Although, most families also recognize the need to save for the proverbial “rainy day”, we have a “live for today” mentality.  Pressing, current “needs” and desires seem more important than future financial needs. These same desires constantly tempt us to spend what we have not yet earned.  Our parents and grandparents focused more on saving, whether in banks or stuffing the mattress; wealth was based on what they had put away.  Today, wealth is primarily measured by material possessions: nice houses and cars, fancy purses, shoes, jewelry, furniture, to name a few.

Just to put things in perspective, Bankrate’s March Financial Security Index survey, conducted by SSRS, who interviewed 1,003 respondents via telephone, stated that more than 1 in 5 working Americans aren’t saving any money for retirement, emergencies or other financial goals. According to this survey, 48% of Americans are only saving up to 10% of their income, while 21% are not saving anything at all.  

Common reasons why common savings plans fail:

• Low income – many families are living paycheck to paycheck, making purchases with credit cards
• Little things add up to become high expenses – going out to eat is the highest expense among today’s business professionals
• Low savings goals or no goals at all – savings in 401k are great, but alone, they are not enough to provide a comfortable retirement
• Inability to delay gratification – this is self-explanatory, and can range from electronics, to fancy restaurants, vacations or other unreasonable spending

Expenses – the main reason we don’t save more money

Modern families tend to live well above their means. Their expenses usually exceed their incomes. This can be the result of poor budgeting and purchasing habits, or a diminution in income. Whatever the reason, they save minimally and make frequent withdrawals from savings. Pledges to replace the money are rarely honored because there never seems to be anything extra to put away. So how can 10% saved, support our quality of life if the income stream dries up?

On the other hand, as incomes and credit limits increase, so do expenses. Ask anyone who makes over $100k per year, if their savings have grown drastically since their income grew.  Most will say that only their expenses grew.  A friend recently got a great job at a law firm, and her income more than doubled.  Her words stick in my mind: “I love my car, but I have to buy a new one; a successful attorney isn’t supposed to drive a 10-year old Saab”.  Unfortunately, this type of pressure is all around us, and our children. Kids get bullied over clothing, sneakers, and even reusing last year’s backpack. As, parents, we have to figure out how to save on everyday expenses, while also focusing on how to keep our kids from being a target for bullying. 

With all these excuses not to save, it becomes easy to put it off. Unfortunately, in the worst case scenario: our death, all the expenses and material wealth will be worth nothing for the family that lives on. 

Life insurance is an essential part of any savings plan.

By definition, cash value life insurance is the ideal method of saving money, with a guarantee face value is available for a family’s needs after the breadwinner’s death. A death benefit is guaranteed at the policy’s full face-value from the outset. Even if the policy owner pays only one premium, the plan is fulfilled the moment he or she dies. This means, the policy provides inheritance and income tax-free cash proceeds that can be converted into a regular income stream. Life insurance also creates liquidity and an immediate estate for the payment of final expenses, taxes, and any debt. It provides funds for education, emergencies, and the survivor’s retirement. 

In addition to death benefits, Cash Value from insurance provides living benefits. When a person or family needs money for emergencies or to pursue opportunities (business or education for a better career, etc.); it provides collateral for guaranteed policy loans and withdrawals. Upon retirement, the policy-owner can use this cash value to supplement retirement income and other financial needs.

Why I need to save more money

As I write this article, I try to be very objective, but being a mother of two little boys, I am incapable of being unbiased. I do not have enough saved for their future, but hopefully I still have time.

I hope and pray that I still have the time, but I don’t know anything for sure about the future, except that death is inevitable. 

No one wants to think about death, or prepare for it, especially at a young age.  We want to think about how to reach our goals, or provide for our family today and in the future.  It is not easy to think about the future without us in it.  In fact, it is heart breaking, especially if we have children.  I worry about lots of things: not providing enough for them to live comfortably when I’m gone, is in the top 3.