Have you ever experienced the feeling of being broke at month-end? Sound relatable, right! Well, we all have been in this situation of tight finances due to poor savings. Often the laid-back attitude towards savings leads to such weak financial management. Perhaps, that’s the reason why we have collated a list of benefits to help you understand the importance of saving money. Having said that, let’s check out these reasons!
- Long-Term Security- One can never predict the future and for that reason, saving up a safety net is a really good idea. Saving money is important because it provides you with financial security. And the more you save, the more secure you will be.
- Emergency funds: It’s inevitable that throughout life, there will be some emergencies. From a family emergency that requires you to fly across the country, to less emotional emergencies like a broken down car, having a decent amount of money saved up keeps you from adding financial stress to the pile. Seriously, money is the last thing you need to be worrying about in an emergency. So do your future-self a favour and save up an emergency fund.
- Big Purchase: From cars to boats, to furniture, to big-screen TVs, big purchases have a way of wiggling into the lives of the financially unprepared. Then, when the dust settles and the monthly payments kick in, that thing that cost so much money transforms into an annoying roommate named, Buyer’s Remorse.
But if you have already saved some money from earlier than you don’t need to worry about it, as it will help you to enjoy your luxurious life without any stress of paying your daily bills.
- Major Life Events: Life is full of events, but there are a few big ones that can get particularly expensive. For instance, the two that instantly come to mind are newborn babies and weddings. So, it’s important to save for them.
- Minimizing Financial Risk: The more money you have, the less risky your financial situation will become. when you only invest 6% of your net worth, it’s pretty likely you will make up for that in interest, alone, over the next year.
Saving and investing your money minimizes your financial risk. Plain and simple.
- Financial Independence: One of the best parts of being an adult is the independence and freedom to do what you want when you want. But the less you save, and the more debt you accrue, the less independence you will have. So, if you want to be financially independent and unshackled, you need to beef up your savings.
- Save for your retirement: Another important reason to save money is your retirement. The sooner you start saving for retirement, the less you will have to save in the future.
- Save for a down payment for a house: Save money for a down payment on a house. If you can save up 20% of the purchase price, you can avoid private mortgage insurance (PMI) and receive better interest rates on a home loan. It can also reduce the amount you need to borrow, making your mortgage payments more affordable.
- To Have a Good Life: There are huge emotional, psychological, and physical consequences to always living stress-fully, from hand to mouth, paycheque to paycheque. People who don’t plan for their future seem to run from the “crisis” to “crisis. There’s so much in your future that you don’t have control over, so putting aside some money to spend when you need it is actually organizing and taking control of your future and financial affairs. You have nothing to lose by saving – and only a happier future to gain.
- Respect: When you save money, you have a higher level of respect for yourself. You think about your future self and what you want in life. You respect the hours that you work, spending time away from friends, family, and passions. So by saving a portion of that time (money), you’re building a higher level of self-respect.
Now that you are well-acquainted with the importance of saving money when are you actually planning to start saving some for a better future?