why is it good to save money
We save, basically, because we can t predict the future. Saving money can help you become financially secure and provide a safety net in case of an emergency. Here are a few reasons why we save: Emergency cushion - This could be any number of things: a new roof for your house, out-of-pocket medical expenses, or sudden loss of income. You will need money set aside for these emergencies to avoid going into debt to pay for your necessities. Retirement Á If you intend to retire someday, you will probably need savings and/or investments to take the place of the income you ll no longer get from your job. Average Life Expectancy Á With more advances in medicine and public health, people are now living longer and needing more money to get by. Volatility of Social Security Á Social Security was never intended to be the primary source of income and should be treated as a supplement to income. Education - The costs for private and public education are rising every year and it s getting tougher to meet these demands. Without money put away in savings and/or investments, you open yourself up to other risks as well. For example, not having enough money to pay for emergency dental care may force you into taking a loan that your savings might otherwise have covered. How much can you potentially save? ItÁs important that you develop a budget using your net income as it reflects your take home pay after taxes and dedications. A common mistake people make is developing a budget off of their gross income. ItÁs a mistake because you re budgeting money you never possessed. Remember your potential savings is the difference between your net income and your expenses.
When developing a saving plan ask yourself these questions: Are there any variable expenses that you can reduce or eliminate? Is there anything you spend money on that you could eliminate and apply towards saving? Save windfall income Á Any unexpected money such as income tax return money. Collect loose change and deposit it in the bank Á Use a piggy bank and deposit its contents when its full. Try frugality Á Purchase cheaper off brand items and save money. Break a habit Á Try doing one less thing you expensive venture a week and apply that money to your savings. Save lunch money Á According to a study by Forbes Magazine, Americans on average spend $1000 annually on going out to lunch. Bring your lunch to work and invest that $1000 in yourself. Have a Ábuy nothing weekÁ. Compare costs of major items before purchasing anything Á Do your due diligence, shop around before making major purchases. Use coupons Á Coupons are a great way to reduce living expenses. Sources: InCharge Debt Solutions and the Federal Trade Commission
You know that saving money is a good thing, but have you ever thought about all of the benefits of stuffing that savings account, piggy bank or money jar to the brim? If not, read on because youâll likely discover that saving your dollars and cents (or pence, depending on your area of the world), can give you many different advantages that you likely never even realized. There is nothing more stressful than having bills that you donât know how youâre going to pay. It can keep you up at night, make you irritable, give you ulcers, and put you on blood pressure medication.
If the stress gets real bad, it can cost you your life. Therefore, youâll save yourself a lot of angst (and medical bills) if you simply set aside enough cash to keep your mind at ease. When you have enough money available to cover your own expenses, youâre not stuck relying on someone else to survive which opens a world of opportunities to you as youâre not limited by your financial situation. That means not staying in a no-longer-wonderful relationship or dead end job as youâll have the ability to leave both if you so wish. How many times have you found yourself with some extra time on your hands but no money to do anything? You wonât run into that problem if you have a rainy day fund that has cash in it to cover going to different events or activities when you find yourself bored and in need of some excitement. Once you start paying attention to your expenses, youâll soon notice all of the areas where youâre wasting money. Youâll comb through bills to look for hidden expenses and youâll buy more sale items instead of paying regular price. It keeps you in tune with your money and allows you to save your cash instead of paying for things you donât want or need. Sometimes there are sales that you simply cannot pass up. Well, if you have a savings account stocked with cash, you wonât have to. You can make purchases when theyâre best for you financially as you have the money just sitting there ready for these types of opportunities. While you can certainly purchase a house with no money down under certain programs, you get a better rate and save yourself a lot of interest over the course of the loan by being able to put 10-20% down.
Sometimes the short term savings means you pay more in the long run. Accidents happen and things break, usually at the most inopportune times. Donât let car repairs or home projects break you financially. Set up a savings account to cover these types of expenses and youâll be able to make them without living on bread and water to do so. As a mother, it is very important to see your children succeed. You want them to reach new heights and achieve their goals. Isnât it a great feeling when you know you can give them a college education without having them worry about paying back the debt over the next 20 years of their life? Your thriftiness can create their financial peace. Can you imagine getting to retirement age and finding out that you didnât save enough to be able to enjoy life? Or, worse yet, that you have to get a part time job just to make ends meet? Save now for your retirement so that you can sit back and relax when youâre ready. Donât wait until you get to that point in your life to discover that you canât live like you want to. Finally, you should save money regularly because it just feels good. It gives you peace and contentment knowing that you have your finances in control. You donât have to worry about sudden expenses or rising interest rates because youâve taken the steps to safeguard yourself. Saving money shouldnât be a chore. It should be something that you do willingly and welcomingly. After all, why miss out on all of these great benefits when you donât have to?
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