It seems that saving money is societally accepted as a good thing. But sometimes, even though we know we should save, it is easier said than done. When done right however, saving can help you cover unexpected emergencies and reach your financial goals.
In my next few posts I am going to tackle why it is important to save, different strategies for saving, and different ways to find money to save when you feel like your budget is already stretched.
Saving money is important throughout one’s life for many reasons. There are three main categories that I think savings falls under.
In life, often the only certainty is that the future is uncertain. This is one of the best reasons to save money. We don’t know when our car may break down or an emergency illness will leave us in the hospital or out of work for a while. These situations could lead to unexpected, and sometimes high, expenses. Without savings to fall back on, emergencies such as these can lead to debt or worse. This is why having an emergency fund is so important. By preparing for the unexpected, these bumps in the road remain just that, and don’t turn into situations that can derail the future. When starting to build an emergency fund, aim to save $1,000.
While we want to save for the unexpected, there are also expenses we need to plan for that we can see coming. Almost everyone who works hopes to retire someday. And for people with children helping pay for school is often a goal. These types of future expenses require planning and saving. This is another reason that saving is so important. The earlier an individual starts saving the more time and compound interest are on their side. In both cases, there are accounts specifically designed to facilitate saving for these goals.
To Meet Goals:
It is good to set goals and work towards them, and sometimes those goals require money. Whether it is buying a house or starting a new business, having money saved towards specific goals is important. It can also allow you to see some of your savings going to fun things (vacation fund anyone?). I think saving to meet goals goes hand in hand with saving for future expenses. But putting a money value on my goals has really helped me get excited about the process and I feel so fulfilled when I finally reach them!
Next, I will tackle different ways to save money. But I’d love to hear from you! What reasons to save money get you fired up?