What are the reasons to save money? A friend of mine asked me some years back. Let’s face it, if you don’t know why you’re saving money, or if you’re saving money for the sake of it. Sooner or later you’ll spend it.
There are many reasons to save money. Different people save for different reasons. And it makes saving easier if you have a clear goal or purpose for the money you are saving.
We save because we can’t predict the future. Saving money can help you become financially secure and provide a safety net in the case of an emergency. Here are some reasons to save money that may open your eyes to consider increasing your savings account balance.
1. Financial Independence
The yardstick for being rich is different depending on who you talk to. However, the one thing that being rich means to most people is financial independence. Calling your own shots, financially speaking, means having the freedom to make choices in your life separate from earning a paycheck.
This means being able to take a vacation whenever you want to, leaving work and going back to school to switch careers, starting your own business or investing in someone else’s start-up, helping family members, taking on a lesser paying job that is more personally satisfying than financially beneficial, or retiring when you want to rather than working because you have to.
Financial independence isn’t the same as being rich, but not having to depend on receiving a certain paycheck can sure make you feel rich and financially independent!
2. Emergency Fund
It’s important you have an emergency fund for unexpected situations. You should have 3-6 months emergency fund in case of emergencies like, an unexpected car repair, your emergency appendectomy or a sudden job loss. If the economy starts to slow down and your job is at risk, you’ll be thankful if you have a good amount of money into your emergency fund to hold you until you find a new job.
Are you just starting out? Then try putting aside at least $1,000.00 to start. If you are working to get out of debt, save what you can to bring your emergency fund up to between six to 12 months of your living expenses. If you are single or living on just one income, you may want to go with a larger emergency fund.
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. And the more money you’ll have when you retire. You can put your money to work for you, especially if you take advantage of the magic of compound interest.
As you continue to contribute over time to your retirement fund, you will earn more interest on the money you have, than you put in each month.
4. Down payment on a house
If you’re looking to own a home in the nearest future then that’s another reason you need to start saving money.
If you think you will not be able to save up to twenty percent down payment, don’t worry. Certain government-backed programs offer down payments as low as 3 percent or no down payment at all.
You can determine how much you save towards this each month depending on your circumstances. Saving for a bigger down payment will help you move into a better neighborhood and make it easier to buy your dream home. It also reduces the amount of your mortgage, making your payments more affordable.
But is it wise to buy a home if you’re single and don’t plan on flipping or renting it out? That’s a story for another post.
Save some money to have fun as you will not want to be paying off your trip in five years. Even if you save up for your vacation, try to save on your vacation expenses. This is saving for the fun things, and it is often easier to motivate yourself to save this way.
If you’re reading this it’s unlikely you’re in middle school or high school because most high schoolers don’t care about saving money.
That means you’re a single person or married. If you plan on having kids someday or you already have kids, you can start saving for their college tuition. And if you plan on sending your kids to private schools, that’s another major reason you need to start saving for their education.
7. Get out of debt
To get out of debt, you have to have some money saved. Sounds ironic, doesn’t it? However, the credit cards are never going to get paid off if you have to keep using them for every “emergency” that comes along. Even if you are an awesome planner, stats show that half of us experience at least one totally unexpected expense each year (and half of those will be unexpected car trouble).
8. To enjoy yourself
Let’s face it, it’s important to have a good time. But it’s also important you don’t go broke or break the bank to have a good time. That’s why it is important you save to have a good time. It is common to save ten percent of your paycheck for your indulgences.
Now that you know some reasons to save money, will you start saving money now?
Will you start saving money now that you know some reasons to save money? If yes, let us know in the comment section below and why you want to start saving money.
If you have any other questions concerning saving money, let us know in the comment section below.
Manage Your Money Better
Below are some personal finance books I recommend to help you save more money. They have helped me a lot and I'm sure they'll help you in your journey to financial freedom.
- The Compound Effect by Darren Hardy
- Total Money Makeover by Dave Ramsey
- I Will Teach You to Be Rich by Ramit Sethi
- Master Your Money (Super Bundle)
- Need an extra $2,500? Get loans up to $5000
- Are you in debt? Get free debt consultation and find a solution to your debt
- Unshakable: Your financial freedom blueprint
- The New Money Masters
- Tools to make money in tough economic times
I have read about 5 out of the 7 books and I can boldly say they have helped me handle my finances better. I believe in them because they have helped me in my financial journey and I think they’ll help you too.