There are a number of smart reasons to build up savings. Even if you think you don’t have much spare cash, it’s essential to put as much money as possible into a savings account. You never know when you will need it! Even if you never have a financial emergency, savings give you options and security. So here are some important reasons to build up savings …
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1. Unemployment
One of the best reasons to build up savings is in case of unemployment. There’s no such thing as a secure job for life any more, so always have money put by in case you find yourself without work. Unemployment benefits are paid for a limited time, and how well do you think you could live on a fraction of your normal pay check?
2. Starting a Family
We’ve all read how expensive it is to bring up a family. Sure, there are ways of economising, but either you will have to pay for childcare or manage on one wage. Savings will help you cover the loss of income until your child goes to school, so start saving well before you plan to start a family.
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3. House Purchase
This is one of the really smart reasons to save money. If there’s any chance you will want to buy a house one day, start saving hard as early as possible. Buying your own property means a lot of costs – deposit, taxes, fees etc. And then there are the costs of maintenance and decoration.
4. Security
Have you ever been in the position of wondering how you’re going to make the rent payment this month? If you have, then you’ll know what a sense of security having savings gives you. When you have money put by, you know that you can deal with unexpected expenses and emergencies, and won’t have to panic about paying your rent or fixing your car.
5. Facing the Unexpected
Unexpected events can happen to anyone. An unplanned pregnancy, unemployment, or urgent house repairs can upset your financial situation and leave you panicking how you will cope with the expense. But the impact will be lessened if you have savings set aside. So save as much as you can!
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6. Choices
As well as allowing you to deal with emergencies, having savings allows you the freedom to make choices. Do you want to take a sabbatical, go back to college to improve your career prospects, or start up a business? Would you like to move city or travel the world? A healthy savings account gives you many more options.
7. Avoid Debt
Debt has become far more acceptable than it once was, and the result is that many people are in a financial mess. The best thing is to avoid debt completely. A mortgage or student loans are the only justifiable forms of debt (and even then you still have to be careful not to overstretch yourself).
8. Pay up Front
It’s so easy to put purchases on your credit card. There is a logic to this since it gives you legal protection. But only ever buy using your credit card if you know that you can settle the bill as soon as it comes in. Don’t let the interest mount up! Instead, save up the money for purchases, especially if they are not essentials. Once you have enough, you can pay upfront, or if it makes sense to use your credit card, pay with that then use the money you’ve saved to pay off the bill.
Even if you think you don’t have a spare cent, try to put something by. Look at where your money goes, see if you can cut back on your spending, and also try to increase your income. Even $50 a week will add up over time. It’s really important to have savings, as it will mean less worry and stress about how you would cope in a financial emergency. Are you worried that you don’t have any savings, and what would you do if you needed money fast?
