By Steven G. Blum
The Saturday Evening Post October 2014
There is nothing more essential to living a financially successful life than developing a habit of saving. It is more important than spending wisely, although that is also vital. It is even more important than smart investing.
Consider my oId friends Susan and Bob -almost living embodiments of Aesop’s fable about the ant and the grasshopper. Susan has always put away part of her earnings for the harsh winter that is almost sure to come. Bob, on the other hand, spent his earnings on just about every pleasure and comfort that crossed his path. While Susan was building a nest egg, Bob was buying a sports car. When Susan trimmed her budget, Bob took out another credit card.
I hardly need to tell you the result: Over the years, Susan’s savings have grown impressively. Bob, on the other hand, has little more stashed away than he did in his youth. Now, as the two of them gaze over the horizon toward the future, the view is different for each one. Susan is assured of living out her life in comfort. Bob is coming to the realization that he will spend his so-called “golden years” scrambling, scraping, and perhaps working. He’s frightened.
I implore you, develop the good habit, do the wise thing, and start to save. Grow your nest egg faithfully. Put money away on a regular schedule and, once there, do not touch it.
Among Ben Franklin’s most famous aphorisms is “A penny saved is a penny earned.” Today, he’s remembered as the very successful man who made substantial donations to the cities of Philadelphia and Boston
-and, of course, founded this magazine. Don’t forget, though, that he arrived penniless in Philadelphia at the age of 17. Among his many achievements, he put away a fully, fortune, slowly, faith over a lifetime.
The idea of putting the things you want something aside for the future is an ancient one. We talk about “saving for a rainy day” with the awareness that, for most of us, that rainy day will surely come. It could be a terrible and sudden storm, as when a promising young politician named Franklin Roosevelt was stricken with polio. Or it may be the slow steady drip of years passing by, turning youthful bodies into old ones that need lots of assistance.
I’ve been using the term nest egg, but permit me to change agricultural metaphors. A fanner must store away some of this year’s crop for seed to be planted next spring. So, too, must we all take some of what we have worked hard to earn now and dedicate it to future use.
Here is a time-tested plan that makes sense for nearly everyone: In your mind, divide every dollar that you earn into three equal parts. The first portion will be spent on essentials -food, shelter, transportation, and so on. The second part can be used to buy some of the things you want but don’t need. These are what give life its color and flavor; everyone deserves a helping of life’s little pleasures. The third part should be put away for the future. This is the piece of each dollar that grows your nest egg and swells your investment accounts. It also gives you something in the present; the peace of mind that comes from knowing you can deal with life’s surprises down the road.