Lesson 24: Importance of Saving Money - Determining What You Want vs What You Need

This is a hard lesson, mostly because it is not usually learned until you get into debt. Usually, the debt is caused by things you want, not what you need.  The best time to start saving money is when you are young. There are very few people who can't manage to save $1 to $5 a week.  Young couples will benefit from putting away $1 or more a week in a savings account with interest. It doesn't seem like a lot now, but you will be happily surprised by the time you have children and they are ready for college, what that small investment amounts to over time.

If you are a person who can't wait to burn all the money in your pocket, the best savings strategy for you will be to have the money automatically transferred into a savings account from your paycheck, or set up an automatic transfer with your bank.  This way you never see the money to actually miss it.

Why is this so important?  In my lifetime, the value of the dollar has shrunk considerably. My father in the 1940s could go to a movie for a nickel. Today, the cost can be as high as $12. In turn, salaries rarely rise to equal the cost of living expenses. If you learn early to save, it will not appear to be "impossible" as the economy changes over time.

The hardest part of this lesson is to learn to purchase what you need versus what you want.  In my thoughts, this is the primary cause of debt.  We don't buy the inexpensive car that will take us from Point A to Point B. We would rather get the nicer looking, more comfortable, and thus, more expensive car.  We want to live in the nicer house, not just the house that provides enough space for our family, which keeps us safe from the outside elements.  It's not a crime to want...it's human nature.  However, it is a challenge to separate wants and needs. Simply thinking about this everytime you make a purchase is the start in learning it as a habit.