"Never Touch Your Savings" — Here's Why I Disagree With This Financial Advice
Do you agree, disagree, or agree to disagree? ;P
By Jeremy Ng — 16 Feb 2024, 05:17 PM
When it comes to savings, the general consensus is that you should set money aside and do your best to never touch it
In fact, there is a plethora of articles, self-help books, and videos out there that teach you how to build up your savings and avoid dipping into it. Some common tips you'll come across include:
- Setting up a separate bank account for your savings
- Setting up an emergency fund for unexpected expenses
- Setting up a sinking fund for expected expenses (such as gifts, car maintenance, etc)
- Spending only after you save
- Adjusting your budget and cutting expenses
- Picking up side hustles to earn more money
The concept of 'not touching your savings' was precisely what I adhered to and earnestly tried to follow during the first few years of my career.
And it worked... Until it didn't.
Here's the thing: During the first few years I started working, despite earning less, I still managed to save RM100 to RM200 each month, and even up to RM500 in a good month.
I even began employing the 'save before you spend' method, setting up auto-billing to save a portion of my salary whenever it came in.
The funny thing is that as I progressed in my career, and my salary increased, so did my living expenses. It's not like I was splurging on branded items or RM100 meals all the time, but having friends (and a partner) just meant that there were more things to spend on, and I was fine with that.
As I grew older, I also began to realise there was a lot more adulting that needed to be done — and most of these things cost money
Whether it was taking a flight back to Penang to see family every other month (RM200), attending friends' weddings (RM150 per wedding), or paying for car insurance and road tax (RM1,000), there were some months when there just wasn't enough money to save, no matter how hard I budgeted.
I used to hate the feeling of having to dip into my savings, even though I did have extra money saved up
By then, I had already accumulated a comfortable safety net, or emergency fund, or whatever you want to call it. But I just felt like it was money I should never have to touch.
The kicker came when I went through three major life changes back to back: Getting married, buying a house, and having a kid
At each phase, I would still try my very best to budget and track my monthly expenditure meticulously. The only problem was that whenever there was an unforeseen expense, or a meal I had while eating out with friends, I'd feel super agitated because I felt I was "overspending".
Naturally, I ended up having to dip into my savings and would often feel unhappy.
But then, a very wise person (a.k.a. the wife) one day asked me, "What's the point of you having savings anyway? Isn't it so that you have money saved up for unforeseen occasions like this?"
That's when my perspective towards savings started to shift, and I became a little more okay to dip into my savings. (But before you overreact, I have an explanation below)
First of all, I'm not saying you should be dipping into your savings for whatever you want or splurging all the time just because you can
Behaving like this is dumb, and you'll end up not having anything saved up for when you really need it.
But what I am saying is that it's okay to dip into your savings for specific occasions or seasons of your life. And however much you want to dip into is entirely based on what's important to you.
For instance, nowadays, I wouldn't mind forking out RM500 on a big family dinner to celebrate a parent's birthday or a family member's milestone because, family is important to me. Or, if my wife and I need to dip into our savings every month to pay for our kid's daycare — we'd do it because it gives us the time and space for our careers, which is something we both value.
One thing that has helped me come to terms with 'touching my savings' is being intentional about what I'm using the money for
Back to the example of daycare, what I did was to take out a sum from my savings and say, "This is the amount I'm allocating for the year towards this specific purpose", and I was okay with it.
Another thing that shifted my perspective was understanding that everything is for a season. I know that I won't be earning the same salary forever, and I know that I won't be paying for daycare forever either. Recognising that there are seasons that are more financially demanding than others has taught me to be kinder to myself.
Of course, the end goal is to be able to save more every month and afford to spend on things I want without feeling guilty
But along the way, I've come to realise that it's okay if I have to use some of my savings once in a while or for a season.
This story is a personal opinion of the writer and does not necessarily reflect the position of SAYS.
You too can submit a story as a SAYS reader by emailing us at [email protected].
