Introduction
The importance of saving cannot be overemphasized. Saving money is the best financial habit because it has so many proven benefits. However, if saving is not easy for you or you do not get the point of it, it is natural to ask yourself, “Why is saving important?”
Saving money is essential because it helps protect you in financial emergencies. Also, saving money can help pay for bulk purchases, avoid debt, reduce financial stress, leave a financial legacy, and provide a greater sense of financial freedom.
Eight reasons to start saving money
Freedom to pursue your dream career
Have you ever seen someone trapped in a job they hate because they did not have the financial freedom to quit and pursue what they liked? If they saved enough, they would not be in that situation.
One of the critical reasons for saving money is to provide freedom to pursue your favorite job. If you have enough cash in your savings account and a lot of investment with interest, there is no reason to endure an unwanted job situation.
In other words, saving a lot gives you the freedom to quit the job you hate and pursue your dream job.
Helping others
Saving and investing will increase your money. As your money increases, your opportunities to help others financially also increase.
If 10% of your income is donated to charity or local churches and you have annual salary limits, your ability to contribute is limited. On the contrary, saving and investing money increases your donation capacity exponentially with welfare.
Also, money is just a tool you can use to achieve your goals. Above all, if your goal is to help as many people as possible, you should keep saving and investing.
Homeownership
If you owned a house, you would undoubtedly have experienced a lot of costs.
Whether it is a high-cost purchase or renovation, such as remodeling a kitchen or a small purchase of a furnace filter, it all adds up. In most cases, you can just use your cash flow, but it is best to prepare in advance.
It is recommended to set up a specific savings account only for your house cost. That way, you do not have to feel guilty about taking money out of your savings when you have to modify or update something.
Compound interest
If you want to build some wealth, you have to utilize the power of welfare. However, if you do not know how to save and you spend all your money, you will miss this valuable financial opportunity.
Also, the more time you waste, the fewer opportunities you have. Welfare interest is compelling, but you have to give it enough time to exercise magic. If you invest just one day, you will see excellent results the next day.
If you start saving now, it can take years to see impressive results. But if you wait a few years to start saving, you will not see any results at all.
Saving money for fun
Also, many people think they should choose between saving and fun, but this is a toxic way of thinking. Fun is an essential part of personal finance and is necessary for financial and physical well-being.
Indeed, you always have to set aside some money for pleasure. When you have money to save, you can do this without feeling guilty and fearing harming your financial future.
Again, saving money is fun and gives you the freedom to do what you want to do.
Big purchases
From cars to boats, furniture, and large screen TVs, big purchases have a way of shaking the lives of financially unprepared people. Then, when the dust subsides and the monthly rent begins, what used to cost so much money turns into a troublesome roommate called “buyer’s remorse.”
Big purchases are fun and sometimes necessary. Living in a house without furniture is the most inconvenient. You need a car to drive. It is not ideal for watching soccer on a 12-inch TV with rabbit ears.
But it is worse to be in debt for a big purchase. Instead, it is a way to save money and pay it in full.
Extended options
If you save a lot of money, you can control your destiny. If you show signs of a nervous breakdown at work, you can quit even if you don’t have a new job yet, and you can spend time recovering your mind before finding a new job. If you do not like living in an unsafe neighborhood, you can move to a safer area because you have enough money to pay for a better apartment or a better house.
If you need expensive medical services that are sick and uninsured, there is a way to pay even if you can’t work while receiving treatment. Knowing that you have an option due to the money you have saved, you can get much more peace of mind.
With that said, money does not solve all problems. Some diseases do not disappear no matter how many procedures you can handle, and random crimes can also occur in safe and closed communities. If fired, it may take two years to find a new job. However, if you have more money in the bank to deal with such a problem, you will reach the top.
Money working for you
Most people work hundreds up to thousands of hours a year to make most of their money. As time goes by, your money works for you more and more, so you can afford to work less, and eventually, you may quit work. When you save money and keep it in the right place, your money starts working for you.
When you first start saving, you will want to keep your money in a safe place where you can use it immediately in case of unexpected spending. In other words, it means an online savings account that may not keep up with inflation with an annual interest rate of 1%.
If you save 36 months’ worth of money as an emergency fund, you can save it in a severance pay account with tax benefits. You can invest through these accounts, such as Roth IRA or 401(k). You do not have to pay taxes on the return on investment that will help your money grow faster. With Roth IRA, you can donate after-tax dollars and keep everything in your account after that. 401(k) allows you to present the pre-tax amount so that you can invest more money in advance.
If you earn a lot and spend less, you can save enough to retire within ten years. Most people take nearly 40 years. However, if you save and regularly invest at some point, you should be able to live on the income from your investment, that is, the money you save. The earlier you start, the longer you have to grow a small amount of money through the miracle of welfare.
Saving money is very important because it provides freedom, security, and stress relief. There are countless reasons to keep, but you can find the right motivation for yourself. It is up to you to prioritize saving, whether it is helping others, improving your marriage finances, leaving a positive financial legacy, or having a little more fun.
Resources
By Zach Buchenau, © Copyright 2018, Intro To Code LLC, viewed 7th September, 2021, https://bethebudget.com/the-importance-of-saving-money/
By AMY FONTINELLE, Updated July 31, 2021, Reviewed by EBONY HOWARD, viewed 5th September, 2021, https://www.investopedia.com/articles/personal-finance/031215/why-saving-money-important.asp
