Hitting pause on savings can help in a pinch, but it’s not a long-term solution to your budget problems.
Many people have budget problems, thanks to today’s inflation and high interest rates. When times get tough, most budgeters change their lifestyles to reduce spending. They may eat out less and stay in more often.
But if this spending diet doesn’t make a real difference to your budget, you might consider axing your savings. Pausing your monthly savings contributions can help out in a rough patch, but it can lead to problems down the line. Long-term reliance on this method doesn’t solve the fact that your cost of living is too high.
A Short-Term Pause Can Turn into a Long-Term Avoidance
When all your bills start to creep up in price, your typical paycheque doesn’t stretch as far. You might struggle to cover your usual bills, the quarterly water bill, and your savings simultaneously. So, you hit pause on the only expense that doesn’t come with a late fine: your savings.
Skipping savings contributions here or there may help with exceptionally tight months. It might be wise to do so if this decision means you can put food on the table or avoid a late fine.
But when every month is tight, your temporary pause could turn permanent. With all your cash going to the essentials, you can’t contribute to your savings, and this fund grows stagnant.
Online Options in an Emergency
Unfortunately, life can throw you some nasty curveballs in the meantime. You get dinged with a speeding ticket, your cat needs emergency surgery, and you need to fill a prescription not covered by your insurance.
Each of these unexpected expenses removes funds from your emergency savings account. If you don’t top them up, you’ll eventually have nothing left for the next emergency.
What then? Don’t worry — you can see if you qualify for an emergency loan online. It’s easy to research emergency loans when you need one because so much information is online; you can open your browser and compare rates and terms without wasting time.
If approved, you can use an emergency loan in lieu of your savings. But you don’t want to rely on borrowing money every time you face an unexpected expense. Instead of adding to your monthly bills with an online loan, you should have liquid savings that are free to use.
Find Ways to Juggle Savings with All Your Bills
The benefits of having savings go beyond limiting debt; knowing you have some money set aside can help you stop stressing about money. It can also give you the flexibility to make fun purchases that come up unexpectedly.
Given the importance of saving, it’s critical you budget to retain your monthly contributions. Revisit your budget to make sure you haven’t overlooked any non-discretionary spending you can eliminate instead of pausing savings. Look through the past year or so of statements to catch infrequent and invariable charges that are easy to overlook.
Next, evaluate your income. How much money you earn plays a big role in your savings abilities. In small deficits, you may only consider adding a part-time job to earn some extra cash on the side.
However, if your cost of living has rapidly outpaced your earnings, it might be time for a career change. Start looking into what you need to do to qualify for a higher-paying job. It may take you some time, but your efforts will help give you breathing room to balance the budget with savings.
