You might think that there are no compelling reasons you should save when you're still in your twenties. Yet the earlier you start putting money away, the better. You never know what is going to happen, and having savings tucked away is a reassuring safety net. It also increases your chances of doing what you would like to do in your life. Here are some of the important reasons you should save in your twenties …
Table of contents:
- for your future
- good habit
- earning interest
- better save than spend
- starting a family
- don't waste your money
- avoid debt
1 For Your Future
One of the most significant reasons you should save in your twenties is that you will be investing for your future. Saving hard gives you options like buying a house, improving your career prospects with a training course, and being able to afford to start a family. It also provides you with the security of a safety net should you become ill or be out of work.
2 Good Habit
Partying and shopping may be fun, but they are also pretty good ways of throwing away your precious money. Do you really need to go to expensive clubs and be out five nights a week? Be selective, and you can still have a social life while you're saving your money. Get into the habit of saving, and you'll find it a tough habit to break (not that you should try to).
3 Earning Interest
The earlier you start saving, the more interest you will earn. It might seem that interest rates are pitiful, but there are some good accounts if you shop around. You can also get higher rates of interest the more you have in your account. Remember that every year you will earn interest on the interest you earned the previous year, as well as on the capital. It all adds up.
4 Better save than Spend
Spending your money on frivolous things is likely to provide only a fleeting enjoyment. The satisfaction of knowing you have enough money to pay all your bills, including unexpected ones, is surely worth much more than having a lot of clothes or eating out every night. Spend money on a night out and it's gone forever; put it in your savings account and it could be there for years.
5 Starting a Family
When you start a family, you will incur a lot of expenses - not least, the loss of income during maternity leave, or if one of you gives up work to raise your family. Saving from your early twenties (or indeed, even earlier) means that you'll have a good amount of savings by the time you start trying for a baby.
6 Don't Waste Your Money
When you're young, it's tempting to splurge your disposable income on clothes, nights out, vacations etc. But an attitude of 'you only live once' is a waste of your money if you spend it on meaningless things. Once you've spent that money, it's gone, and you probably won't even remember the things you wasted it on. It's better to have your money in the bank for something you really want.
7 Avoid Debt
Lastly, having savings helps you to avoid getting into debt. There are only really two things for which it's worth taking on debt - getting a mortgage when you buy a house, and studying to improve your career prospects. Save as much money as possible, starting as early as possible, and you won't need to put unexpected expenses on your credit card.
Saving might seem much less fun than spending, but life isn't just fun. You really don't want to ever find yourself wondering how you're going to pay the rent or buy groceries. So get into the savings habit early, and save yourself from financial anxiety. Are you a spender or a saver?
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