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When I was young my dad always taught me to put away
part of my money and "Save for a rainy day." At the
time I didn't exactly understand what he meant by "a rainy day",
but I do now. You never know when the car is going to break
down, the refrigerator quits or a hundred and one
other little accidents will happen that you will need extra
money for. If you have extra money put aside you can shop
around for the best deal, pay cash for it and save a bundle
in interest.

I have since been told by other sources that to be on the safe
side you need savings put away to equal six months salary.
This should be liquid savings, not stocks, bonds etc. You need
to be able to access this easily in case you lose your job or some
other catastrophe strikes. This will be considered your short
term savings.

Dad also told me, "Son, you are going to get old someday and you
are going to need some money to live on." This is what is
considered to be long term savings. This would be best invested
in stocks, bonds or mutual funds. A good financial planner
could help you select the ones earning the best interest at
the time you are ready to invest.

Some financial analysts are saying that people are not saving as
much as they used to. That seems strange, since most people
are earning more now than they ever did, so let's see if we can
find a reason for this.

#1. Our population has become too materialistic. Everything
imaginable is advertised on TV, in newspapers etc. with little
or no down payment and easy monthly payments. Everyone
wants instant gratification, they cannot wait long enough to
save the money for what they want so they buy on credit. The
finance people love you for this because it is making them
rich. After going deeper and deeper in debt you have no money
left to save.

#2. The government has instituted various welfare programs to
take care of you in case of catastrophic illness and some
unemployment in case you lose your job. They also have
Social Security to take care of you when you retire. Well, guess
what. That will only take care of the bare necessities, there
will be none left over for enjoyment. Just ask someone who is
trying to live on Social Security. Also, the government says that
the Social Security Trust Fund could run out in another twenty
years. Then What?

#3. There is an underlying belief among some that the earth
is about to self destruct. Everyone from the environmentalists
to some religious sects are predicting total destruction of the
earth, therefore no future and no need to save for the future.

There have been doomsayers all down through history and none
of their predictions have turned out to be true. So, what if the
current predictions turn out to be wrong and you do live to a ripe
old age? What will you do then? Live on Social Security? What
if there is no more Social Security?

If you do not already have a savings plan started, now will be a
good time to consider starting one. A good amount to save
would be 10% of your take home pay each month. It would
also be good to put half of this into an investment such as
stocks or a mutual fund.

So you cannot afford to put 10% into savings right now? Put
whatever amount you can afford if it is only $10.00 per month.
Get the savings habit started and increase it as you are able.
As you see the money start to accumulate you will be proud
of yourself for having the integrity to put aside the extra money
and you will want to put more money into savings as you are able.

May you have a long happy and prosperous future.

John Watson


John writes a weekly colum,n for his hometown newspaper.
You may read some of his stories at: http://go,to/backfence
You may contact John direct at:


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