Saving money definitely requires some sacrifice and discipline. It is a lot easier to give in to daily impulses, such as buying things just for the momentary pleasure it brings, or going out with friends frequently and getting a huge credit card bill later. However, it’s a known fact that saving money is necessary. But do you know why?
1) You Won’t Be Desperate in Emergencies
Financial emergencies, such as losing your job or having to fix your car, can happen with anyone at any time. However, when you have money saved up, you’re not in a hurry to find funds to cover your unforeseen expense. If you still don’t have an emergency fund, it’s a great idea to start small since you probably don’t have the habit of saving money yet.
2) Helps You Own Properties
Have you always dreamed about owning a house or any other property? For that, you’ll have to at least have money saved up for a down payment, so that you can finance the rest of the amount at a way better rate. It is recommended to save up at least 20% of the purchase price, that way you won’t need private mortgage insurance (PMI) as well.
3) Reduces Money Anxiety
If lack of money has ever kept you awake at night or made you worry about how you’re going to pay the bills during the day, sweat, or made you breathe rapidly, it’s a sign you have money anxiety that you should start saving money up. Saving money will make you more relaxed since you’ll know that if something goes bad, you have that money to help you out.
4) Pay For Your Education and Your Children’s
Education is crucial to one’s life and career, but it can certainly be expensive. It is estimated that people spend around $10,440 per year on a four-year public university course. Saving money is necessary if you don’t want you or your children to end up with a huge amount of student debt.
5) Assists in Paying For a Vehicle
Many people dream about having a car so that they can have more independence when going places. However, it’s necessary to save money if you want to get a better deal. You can either buy and pay it all at once, or you offer down payment and get a lower interest rate.
6) Can Make You Financially Independent
Saving money is also important so that you have the cash to invest. Depending on how much money you accumulate, and the investments you make, you will likely be able to live comfortably without having to work or other people’s money, being financially independent.
7) Will Help You in Retirement
Most people don’t give that much importance to saving for retirement. However, it’s a necessary thing. It’s never too soon or too late to start doing it. You can start by allocating your money to a 401(k) or an individual retirement account (IRA) which will pay you compound interest over time.