Reason to save money: Every human adult desires financial freedom. Financial freedom is important in our lives. Financial security ensures that we live the type of life we desire. Knowing how to save a part of our earnings is an important practice which gives us a number of benefits for as long as we live.
People understand that saving money is very good yet; most of us are unwilling to cut out a small portion of our salaries as savings. The urge to spend our money is greater than the urge to save.
We get a lot of satisfaction spending the money we have struggled to make. But we should save nonetheless. Savings is an important factor in reaching our financial goals. We invest mostly from the money we have saved.Â
READ MORE: Learn The Proven Habits Behind Saving
Saving is basically setting aside money for future emergencies or purchases. Additionally, saving is spending less now so that you are able to accumulate more in the future. People must understand that having savings has enormous benefits which include being financially independent, being debt-free, etc.Â
Starting a savings journey is quite easy. You just require to be determined to reach your aims. You can start saving money by putting away a small fraction of your earnings either weekly, or monthly. You can upgrade on the amount you save as you go.
The main thing is to get started. Note that savings thrives on financial discipline, planning and being mindful about spending your money. You can create a budget and follow it. You can reduce your living expenses and start saving more.
Importance Of Savings
Financial independence
The basic need to save money arises from the need to gain financial freedom. Financial freedom brings stability. This can absolve you from so much financial stress. This will enable you to pay your bills without leaning on friends and relatives or on your monthly salary or wages to sustain your current lifestyle.
If you have saved enough funds over time, you can embark on major life decisions without thinking much about the impact.
Such important life decisions includes leaving your current job, going on a vacation, planning your marriage, setting up your own business, and even planning to retire whenever you wish to. Not minding the fact that you are not really old. You can take these key life decisions without taking any pressure if you are financially independent.
To Prevent Bad Debts
If you want to avoid a pile up of debt, you need to save regularly. You can create a savings plan to guide you. You can also employ the services of a credit counselor to draw up a savings plan.
Too much dependence on credit cards will have negative impact on your finances. You need to plan and come up with a means of paying off your credit card bills when due, so as not to have a backlog of unpaid bills and penalties for late payments. All these affect your credit score negatively.
You can rely on your credit card for monthly expenses, but it is important to pay them off every month and on time, instead of building bad debt in the long run. By relying on your savings to make these living expenses, you can save a lot of money by avoiding the use of your credit card and living a debt-free for life.Â
Emergency Expenditures
Emergency expenditures can occur from time to time. These emergencies could be come in various ways such as accident, health issue, car repairs, house repairs, or even a family event. By having some savings in your bank account, you will be able to tackle these unforeseen expenses.
You need to set up an emergency fund savings (if you have the means), which can be used when unexpected things come up, instead of borrowing money from friends or family. Building an emergency fund frequently can also assist in maintaining your financial plan and keep a check on your monthly expenses.
Purchasing A Home
Owning a home is one of the most significant financial decisions that a person can make. It is the wish of every adult; to have a home of their own. However, even if you are planning to obtain a home loan, you need to pay a part of the price as the down payment.
This can be anywhere 10-20% of the total purchase price, and only then banks will consider lending you the remaining sum. You will be able to pay this only if you have saved enough money.
Again, if you are able to pay a part of, or the entire amount, yourself, you will also save a lot on the interest amount on the home loan, and use that money for moving, maintenance or furnishings.
Purchase A Car
If you want to buy a new car, or any other luxurious item, you need to have some funds set aside. By saving money, you don’t have to work for more years to pay off the high-interest rates for buying a new car.
You can also pay in full when you have saved enough to buy a car. When paying upfront, you can get more discounts on the car and other items, and negotiate better as well. You will be free from a monthly debt payment plan which can become burdensome on your finances in the future.
Medical And Health Care Emergencies
From time to time, life presents us with unexpected events in the form of sickness and other medical emergencies. To minimize the impact on your finances, you can create you can create an emergency fund which is specifically meant for dealing with medical and related expenses.
Ensure that you do not spend that money on anything else, but only on critical emergencies.
Planning Your RetirementÂ
People want to work hard for a few years and save enough money to retire early and enjoy their life, not necessarily working till they are up to 60 years.
Saving money and building a large amount of wealth will ensure that you retire when you want. You should set a target, work hard to achieve that number and then retire whenever you want to. It will help you to do something else in life.
Tuition Fees For Your Children
Higher education is becoming very expensive, and if you plan to support your kids through college, you should start a savings fund for them. Saving for college is very expensive; however, it isn’t impossible, especially if you start early when your kids are still young.
Additionally, this is also a meaningful way to teach your kids to save. They can also contribute to their college fund by taking part-time jobs, as well as applying for scholarships, and taking work-study opportunities.
Traveling
Traveling is always an expensive and interesting venture. It is usually an experience people crave for. People travel to choice destinations for leisure, education, weddings etc. How far and how much travels you embark on is determined by your available resources.
Traveling affords people with the opportunity to learn about new cultures, food etc. Most of us want to travel the world; however, a vacation to the US, Australia or Europe. Travel will be more expensive if you like indulging in luxury hotels.
Saving money to travel is one of the best things you can do. If you already have a destination in mind, it is vital to estimate the cost of travel that you are planning to do and save money accordingly.
Investment
You can save towards investments. Saving to invest in ventures such as real estate, agriculture, shares and bonds is a great way to beat inflation.
Economists believe that you should make your money work for you. By putting your money in a savings account, you can make your money grow by getting higher returns. By investing in long term plans, policies, and schemes, you beat the rising costs of inflation effortlessly.
Living Worry-Free
The other reason to save money is to enable you to live a worry-free life. If you don’t want to compromise on your life choices continually, it is best to build a savings fund and contribute to it regularly.
The importance of saving money is simple; it allows you to enjoy greater security in life. In case you have some money set aside, you will have something to fall back on in hard times.
If you have money set aside for discretionary expenses, you will be able to take more risks, like start a new business, or take a break if you want. You can live your life stress-free if you don’t have to worry about money all the time.
Conclusively, saving money instead of spending same is easier said than done. However, having some savings can give you a great confidence in making smart life decisions. If you haven’t imbibed the habit of saving a part of your earnings yet, you can start today.
You can start with either a weekly or monthly saving plan. Cut down on unnecessary expenses and make wiser spending choices. This will help to have more money in your bank balance. Set up a clear goal or purpose. This will help save more. See more.
Savings help you to remain financially stable even in the midst of personal economic crisis. Start a savings journey today and your future will thank you for it.
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