I recently overheard two shoppers discussing the high price of groceries at the supermarket. One lamented that she had to discontinue her son’s college savings plan as it was costing her more each month to buy the necessities. “Right now, it just doesn’t make any sense to save,” she complained.

Rising inflation levels and reduced interest rates have definitely curtailed the ability and willingness of many people to save. When they have to make a choice between paying the bills and putting aside money for the future, their current needs will always take precedence.

Some people believe that the money tradition of saving has gone the way of phone booths and floppy disks — an outdated and old-fashioned relic of times gone by. They declare that it is more money-savvy to invest their cash than to leave it languishing in low-interest bank accounts.

Despite the realities of tenuous budgets and unattractive returns on savings, there are many reasons why the practice of saving is still an essential financial habit to adopt. Let’s look at some considerations that will help you to make sense of saving.

Develop money discipline

It is impossible to genuinely succeed in any worthwhile endeavour without having a disciplined attitude and approach to the task at hand. Success often carries the price tag of sacrifice; if you want to reap financial rewards, you will have to give up something that may be important to you.

Saving may force you to choose between acquiring an item you need or want today and putting aside your funds for a delayed purpose. When you save, you’re affirming that your future is just as important as your present, and you’re committing to persevere with your goals to live a better life.

This can be a tough decision when the current demand for money is urgent. However, a choice to save for the future does not always absolve you of the requirement to deal with the expenses at hand right now. Instead, you should be determined to find ways to earn more and achieve both objectives.

Change your money relationship

For many people, money is a disposable commodity that comes into their possession for only a fleeting moment. Money doesn’t stick around long enough to put down roots; as soon as it makes an appearance, it is quickly passed on to other people in exchange for goods and services.

If this describes your relationship with money, then the only way to change this dynamic is to make saving a priority. When you save, you’re pledging to retain some of your income for yourself, instead of simply acting as a conduit through which money flows in and out like water in a pipe.

Saving can change your relationship with money from one of scarcity to one of abundance. Even if loose change is all you can save, put some aside each day where you can see the money growing. Every dollar that is added to and stays in your stash of cash is a sign that your wealth is increasing.

Create emergency funds

When people spend all their income on their immediate needs, they may have an expectation that they will always have the ability to work another day for another dollar. The possibility that they may become incapacitated or otherwise prohibited from earning may not cross their minds.

However, your future is not guaranteed, so it is critical for you to build a source of funds that can help you in case of emergencies such as job loss or a medical crisis. When you save, you are declaring that your well-being as well as the security of your family is your financial priority.

Another way to reduce the impact of life’s unforeseen and unwanted situations is to put aside money into health-care plans, as well as general and life insurance policies. These can provide larger lump sums to take care of major health challenges, property damage or loss of life.

Build an investment base

Some people believe that saving is an inefficient way to utilise their funds, and opt to place all their funds into investments which can potentially bring higher returns. While solid investments may deliver better rewards, cash does have an important role to play in designing a portfolio of assets.

Firstly, you need to put aside money towards building an opportunity fund so that you can take advantage of good investments when they arise. When you save, you are assigning a portion of your income towards creating wealth for yourself and building a legacy for your family.

It may be unwise to finance investment projects by borrowing money or by redirecting large portions of your monthly income which is required to cover your expenses. This will only increase your risk of a financial disaster in the event that the investment does not perform as expected.

In addition, maintaining ready cash in short-term money market accounts or on bank fixed deposits may prevent you from having to liquidate your major investments before you are ready. As the saying goes, ‘cash is king,’ and your savings can actually help you to preserve your wealth.

Copyright © 2015 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, May 14, 2015.

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Cherryl is a money coach and business mentor, and founder of Financially S.M.A.R.T. Services. See more of her work at www.entrepreneursinjamaica.com and www.financiallysmart.org. Contact Cherryl