Saving Small vs. Not Saving at All
An Introduction into "Luke-Warm" Financial Takes
Welcome to the first installment of Lukewarm Takes, where we challenge extreme money ideas and replace them with balanced, research-backed perspectives.
Today’s lukewarm take aims at a defeatist myth I hear all too often “Saving is pointless if you don’t make six figures.”
I see this point brought up quite often both online and in real life. The basic thinking is that if you’re not raking in a big salary, why bother pinching pennies to save or invest?
How much difference can $50 here or $100 there really make when others are saving half their paychecks?
Spoiler alert: it turns out even a modest amount of savings can dramatically boost your financial security.
A study by Vanguard found that having just a couple thousand dollars in the bank for emergencies was associated with a 21% higher level of financial well-being, which is a bigger impact than earning a six-figure income in many cases.
You don’t need to be rich to feel financially secure.
What the Vanguard Study Found
Vanguard survyed more than 12,000 people across different ages, income levels, and net worth asking detailed questions about each person’s financial situation and stress levels.
The goal was to figure out what factors best predict someone’s financial well-being which is essentially how comfortable and secure people feel about their money. The usual suspects like income, total assets, debt, and investing habits were all considered.
But the standout finding was surprisingly simple: the presence of an emergency savings fund trumped everything else.
Having a small cash cushion – about $2,000 – was the strongest predictor of financial well-being. Folks with roughly two grand set aside for a rainy day reported feeling significantly more secure than folks with zero savings.
How much more secure?
About 21% higher on a well-being scale, according to the study.
That is a huge jump for what many would consider a modest savings target. For context, the survey also found that people earning $500,000+ a year only saw about a 12% uptick in their financial well-being, and even those with over $1 million in investments were about 18% higher on the well-being scale.
In other words, a couple thousand bucks in the bank mattered more than a fat paycheck when it came to peace of mind.
That’s a powerful reality check for anyone who thinks only high earners get to feel financially safe.
Why does a small emergency fund have such a huge impact?
The researchers suggest it’s because even a minor safety net dramatically reduces day-to-day financial anxiety.
Participants with no emergency savings admitted to spending over 7 hours a week stressing about money matters, while those with a savings buffer spent about 2.5 fewer hours per week worrying.
That means less sleepless nights over the next surprise bill.
The study also noted that workers without any savings were far more distracted and less productive at work due to financial stress. Emotionally and practically, having a bit of cash ready for life’s “oh-crap” moments acts like a pressure release valve.
It’s easier to focus on non-money issues knowing a busted transmission or unexpected medical bill won’t instantly push you into debt or crisis.
What It Means for Your Wallet
The idea that saving only matters if you’re piling up huge sums is flat-out wrong.
As the research shows, the first couple thousand dollars you save may have the biggest impact on your financial well-being.
Even if you can only save a little each month, do it.
That $25 you put away instead of ordering takeout might feel trivial, but over time those little deposits build a shield between you and life’s mishaps. Think of it this way: an emergency fund is measured in months of peace, not just dollars. Even one month of expenses saved can prevent a small setback from snowballing into a financial disaster.
So, no – your $50 or $100 saved is not pointless. It’s your ticket to sleeping easier at night.
Set an attainable first goal like $1,000 to $2,000. Telling someone to save 3–6 months of expenses (the standard expert advice) can be overwhelming, especially on a tight budget. Instead, start with a bite-size milestone that gives you a win.
Aiming for your first $1,000 or $2,000 in savings is both realistic and incredibly effective.
For example, if you save $5 a day (about the price of a fancy coffee), you’ll have $1,825 after one year, nearly hitting that $2K mark.
If daily saving is tough, try automating $150 a month into a savings account; you’ll reach $1,800 in 12 months, and about $2,400 in 16 months.
The point is that you can get to a two-thousand-dollar cushion in a year or so without a six-figure income.
Once you hit that target, you’ll likely feel the difference.
With a solid emergency fund, an unexpected car repair or medical bill turns from a catastrophe into a mere inconvenience. That’s a priceless feeling, and it’s bought with surprisingly small monthly sums.
Remember that income isn’t everything when it comes to security. Yes, making more money can help you save more , there’s no denying that. But as the study showed, earning a big salary doesn’t automatically guarantee peace of mind.
Financial stability is as much about your habits as your paycheck.
That shift in mindset – from feeling helpless on a low/modest income to feeling empowered because you have a cushion – is what Lukewarm Takes are all about. In this series I’ll be replacing the extreme all-or-nothing thinking (“only the rich can save”) with a practical mantra “start small, but start now.”
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
A small step in the right direction, coupled with persistence, rarely finishes in the wrong place.