There is a saying that “it takes money to make money”. While there is some truth to the
saying, it may also be overrated.
When it comes to starting a successful business, money may help, but it
isn’t the most important thing. In
fact, not having much money is oftentimes what makes entrepreneurs creative and
cost-conscious from the beginning.
I have come up with a more accurate saying: “It takes money
to save money.” Let me explain
Having just a little bit of money can really help you save
significant money over the long run.
It is important to have a cushion to allow you some flexibility in your
One example is car insurance. Some companies will offer you a discount to pay the full
premium up front, as opposed to making monthly payments. You might be able to knock a hundred
dollars or more per year off of your bill. And with interest rates paying almost nothing, it is not as
if you are missing out on collecting interest of any significance by leaving
extra money in the bank.
Of course, this will not work for someone living paycheck to
paycheck, which makes up a large segment of the American population. If you don’t have any cushion in the
bank, you can’t take advantage of the savings.
Just recently, I went to Target to do some shopping. They had a deal on Black Friday where
if you spent at least $75, then you would receive a coupon good for the next
week only for 20% off your entire purchase, one time only.
I spent about $80 (just over the limit) at Target and
received the coupon. It was money
spent on things I was planning to buy anyway.
The following week, just before the coupon expired, I took
my family on a shopping spree at Target.
But it wasn’t to buy junk or to make impulse buys. We loaded up 2 carts with things we would
eventually have to buy anyway.
We bought paper towels, soap, Kleenex, toilet paper, bottled
water, garbage bags, sandwich bags, laundry detergent, vitamins, and batteries,
just to name some of the things.
If the item we were buying was on sale, we would get more than one. We bought one toy, but it was a
Christmas present that we were planning to buy anyway.
Our total was over $300. With our coupon, we saved over $60. In retrospect, we probably could have
easily bought more.
The point is, a family living paycheck to paycheck with
virtually no cushion could not afford to do this. They wouldn’t have had the available money to pay for it or
they wouldn’t have been able to pay their credit card bill the following
month. And if they didn’t pay off
their credit card bill (another example of saving money by having money), the
additional interest payments would likely negate any savings.
While 60 dollars is not much money in the scheme of things,
this does add up after a while.
And someone who is living paycheck to paycheck really can’t afford to
not get these kinds of savings.
So if you are living paycheck to paycheck, my suggestion is
to do everything you can to get out of the bad cycle, even if it means severely
cutting back for a few months.
If you already have a cushion with your finances, then I
would encourage you to take advantage of these types of savings, assuming it is
worth your time.
It takes money to save
money. Luckily, it doesn’t take a
lot to get started.