Why do people save?

RG2015

Okay, I know there are lots of reasons why people save but I am curious about the psychology behind saving.

Are you saving for something special like a house or a car or just for a rainy day? And why save rather than invest?

I am a saver but with my two adult children one spends all their money and the other is building up a massive pot of money. (And I value my life too much to comment on my wife's propensities )

Thrugelmir

As savers there's never a need to borrow. Why pay interest if you've no need to.

tibbles209

I save for my children (who do not exist yet - planning to start trying for a baby in 3 years or so). My main priority in life is to give my children the best upbringing I possibly can and be there for them as they are growing up. I want to get a proper family home before I have kids, and have enough of a cash buffer that I will not be at risk of having to go back to work within my year of maternity leave. I also want to able to work part time after maternity leave.

This will of course all be very expensive - my husband and I are saving very hard for a house at the moment. We do already actually have enough for a house deposit, but are planning to move elsewhere in the country in 2.5 years time when my work contract is up so it doesn't make sense to buy at the moment for such a short time. We save our house deposit money rather than invest because we will need that money in the next few years.

I have a separate savings account to build our emergency fund to the point that if my husband was to end up out of work while I was on maternity leave we would have enough that I would not have to go back to work early.

We also invest some money every month for long term goals such as house deposits/ wedding costs for our kids when they are grown up. We do of course also invest in pensions.

When I read this back it really does make me sound very strange but as cheesy as this sounds I feel like I was just born to be a mum, and my not-yet-existent babies are already the most important thing for me. My husband does laugh at all my baby-centred financial plans but he is completely on board; he just leaves me to it (I sort all of our finances).

bertpalmer

I save virtually nothing (enough for an emergency fund) and invest everything.

It’s primarily for retirement (30 years away) - and it’s nice to know that if I needed to pay my mortgage off I could do at any time. I don’t think investing in cheap, global, diverse funds is any more risky than saving.

RG2015

tibbles209 wrote: »

When I read this back it really does make me sound very strange but as cheesy as this sounds I feel like I was just born to be a mum, and my not-yet-existent babies are already the most important thing for me. My husband does laugh at all my baby-centred financial plans but he is completely on board; he just leaves me to it (I sort all of our finances).

Thank you so much for your detailed reply and you do not appear strange in any way.

Your reply fills me with joy (and a few happy tears) reading of your plans, hopes and aspirations for the future. I hope all of your dreams come true in the years ahead. You certainly will have a sound financial base.

Now I sound a bit strange.

tibbles209

RG2015 wrote: »

Thank you so much for your detailed reply and you do not appear strange in any way.

Your reply fills me with joy (and a few happy tears) reading of your plans, hopes and aspirations for the future. I hope all of your dreams come true in the years ahead. You certainly will have a sound financial base.

Now I sound a bit strange.

Thank you for your kind words RG2015 I hope so too. I've been waiting my whole life to meet my little ones, I am excited that there are just a few more years to go!

ChesterDog

I save and invest.

I became a fulltime carer for my wife thirteen years ago (at 43 and 42 respectively) as we sold our business when she became unable to work due to her MS.

Seeing this sort of thing coming (she had been diagnosed five or six years earlier), we put everything we could into paying off our mortgage and contributing to our pensions while we were still earning.

We were doing okay living off interest on savings, and gains on investments (which a professional concern managed for us).

Then the financial crisis hit and it took a scythe to our investments.

We have had real financial difficulties in the past, very nearly heading into bankruptcy a few years after starting the business, despite working way too many hours and not taking a day off for five years (not something I recommend). We were not about to let that happen again...

Watching our investments going down the gurgler was a great incentive for me to take control of them, and devote myself to learning how to manage everything myself, which suits me anyway.

Nowadays, we are in the position of being very financially secure, but I am very mindful of the fact that if something should happen to me (accident, stroke...) then both of us might need care - perhaps for the rest of our lives - so we are still invested (to the tune nowadays of well over a million) in order to generate a big enough cushion to cover anything we might need.

We also keep several years of current outgoings in savings. In the event of a market crash or crisis, this means we can leave our investments to recover instead of drawing on them.

It helps that we are both very interested in the subject, so investing is really a hobby, a pastime, a lifestyle and a way of enhancing our financial security.

It's often said that your health is the most important thing, but having enough money to be secure means that poor health is not nearly as devastating as it would be for many.

maxie014

A lad i know just got hit with a £750 bill off his new landlord!
No way can he pay it.
Maybe why folk should put a bit of money by when they can.

He is moving out to a cheaper house so the new landlords lost a good tenant,maybe he should have gave him a bit more leeway?

getmore4less

Simple zero sum game.

T
he more you don't spend now the more you have to cover in the future when can't or don't want to earn.

With younger people there is move towards live today so spending habits have moved to save/invest less for a lot.

getmore4less

ChesterDog wrote: »

I save and invest.

I became a fulltime carer for my wife thirteen years ago (at 43 and 42 respectively) as we sold our business when she became unable to work due to her MS.

Seeing this sort of thing coming (she had been diagnosed five or six years earlier), we put everything we could into paying off our mortgage and contributing to our pensions while we were still earning.

We were doing okay living off interest on savings, and gains on investments (which a professional concern managed for us).

Then the financial crisis hit and it took a scythe to our investments.

We have had real financial difficulties in the past, very nearly heading into bankruptcy a few years after starting the business, despite working way too many hours and not taking a day off for five years (not something I recommend). We were not about to let that happen again...

Watching our investments going down the gurgler was a great incentive for me to take control of them, and devote myself to learning how to manage everything myself, which suits me anyway.

Nowadays, we are in the position of being very financially secure, but I am very mindful of the fact that if something should happen to me (accident, stroke...) then both of us might need care - perhaps for the rest of our lives - so we are still invested (to the tune nowadays of well over a million) in order to generate a big enough cushion to cover anything we might need.

We also keep several years of current outgoings in savings. In the event of a market crash or crisis, this means we can leave our investments to recover instead of drawing on them.

It helps that we are both very interested in the subject, so investing is really a hobby, a pastime, a lifestyle and a way of enhancing our financial security.

It's often said that your health is the most important thing, but having enough money to be secure means that poor health is not nearly as devastating as it would be for many.

Once you have enough managing investment can become your job.

Puddylove

Ive always been quite careful with money, always paid my bills on time, never gone overdrawn, always worked.

I was a bit inclined to spend my excess cash in my hobbies though so only saved a bit and for short term goals. My ex however just spent, spent spent and dragged me to the brink of problems through his insistence on living beyond our means, living for today.

By the time I split with him I had debts of £25 to £30k (I never did want to work out the exact figure). It would only have taken a short period of not working to mess up my life.

Luckily, I have a good job, with the opportunity to take multiple additional PT jobs, so I upped my earnings, and moved my debts (I still had an excellent credit history so could get cheap rates).

And now - I've paid everything off, have recently sorted my pensions out and am paying extra in to them (although I'll be fine anyway).

Now I save every month just because I don't need to spend...I have many savings accounts for new car when needed, vet bills, you name it. I'm pretty fortunate at the moment in that I'm healthy. I like my job/s and I am happy enough without needing material things.

And I've recently started investing a little into VLS.

I do really feel for people who end up in financial trouble though - it's often simply bad luck. It could be any of us.