It is all too easy not to think about savings as being a priority. Many of us tend not to think about what will happen in the future and live for the day. Making the most of the present is important, but it is also important to think about the future and your financial situation.
If you were to save regularly, you will quickly find that your savings add up and keep on growing. Saving money requires discipline, however, with firm determination and setting goals, it is not a difficult habit to adopt.
Here are some of the main benefits of saving money:
1. It helps in emergencies
Emergencies are always unexpected. Therefore, when they occur, the funds required are usually not part of your regular budget. There is often pressure to look for extra funds at a very short notice such as funeral expenses, house repairs and even car repairs. Accumulated savings can often go a long way in alleviating these emergency situations.
2. Cushions against sudden job loss
You may have a good job now, but what if you were to lose that job? Suddenly finding yourself unemployed can be frightening and traumatic, but it’s something many people will experience at some point in their lives. Having savings in place to help cover your living expenses while you find a new job can provide you with peace of mind.
3. Helps finance those big-ticket items and major life events
Whether you’re looking to buy a house or car, tie the knot or even start a family, many big life events can often carry a hefty price tag. For some of these the thought of reaching for a credit card or taking out a personal loan is all too easy. However, using savings to help fund these things is a much better option than putting yourself in debt and having to repay the funds borrowed along with interest. Some of these, such as purchasing a property doesn’t allow for borrowed funds to be used anyway, so the money required will need to have been saved regardless.
4. Limits debt
Having some amount in savings can help to limit the amount of debt needed, as they can be used to finance certain expenses instead of using a credit card or personal loan. This will limit the requirement of further funds and will also allow you to save the amount that would have been spent on interest. Savings also help avoid the need to take out an emergency loans when urgent situations occur, which often come with a higher interest rate.
5. Helps prepare for retirement
When you start the savings habit, it pays to think about the long-term, as well as what might be just around the corner. The state pension itself is unlikely to provide you with enough income to cover all your costs when you eventually stop work, particularly as the age at which you’ll be able to claim it is moving gradually further away, so the earlier you think about retirement planning the better.
Making a habit of saving a small portion of your income over several years can accumulate into a substantial amount of retirement funds, which will help to make your retirement much more comfortable.
There are a variety of reasons to begin or continue saving money. Different people save for different reasons, but in general, having savings will benefit you in the future, whether you’re avoiding hardship or going after the things you want. It makes it easier if you have a clear goal or purpose for the money you are saving.
Remember no matter what stage of life you’re in, one thing will always remain the same: You’re never too young — or too old — to save money.