“I only live once, and if I have enough money to get by, why is saving money so important?”
Does this line sound familiar to you?
It makes sense to a certain extent. But saving money is NOT only for the present. Instead, it’s more for your future financial health.
You probably already know the importance of saving money early and want to save a whole chunk of cash aside, but you need a bit of money-saving motivation to get started.
Or, you are indecisive about whether you should start saving or not.
Either way, you are in the right spot.
Money is not just used for shopping, buying, and paying. The tool is versatile. For example, you can save money tocover unexpected bills, achieve financial goals, earn compound interest, andbuild wealth.
In this post, you will know the importance of saving money and the top 12 reasons to start saving NOW.
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Why Is Saving Money So Important?
1. Save For The Unforeseen Expenses
Do you have at least $500 on hand to cover an emergency?
According to CNBC, 51% of Americans have less than three months’ worth of emergency savings.
Unforeseen expenses could come in various forms. It could be an unexpected job loss during a financial crisis, an urgent doctor visit on a trip, or a car breakdown in the middle of the road.
When accidents pop up and leave you with hefty bills, you will know the importance of saving money by heart. You wish you could have a savings buffer in place to help.
If there is no extra cash in savings, you are more likely to take expensive borrowing to cover the surprise bills.
You don’t have to put yourself into the worst-case scenarios if you have a sizable chunk of money set aside for an emergency fund.
Indeed, money doesn’t solve all problems in emergencies. It might not speed up the process of finding a new job or shorten the travel distance to see an ill relative.
But,at least you don’t have to worry about money when dealing with life’s curveballs.
Still wondering, “why is saving money so important?” I bet you’d have a good reason now.
2. Save Money For A Healthy Relationship
Did you know money issues could break a marriage/relationship?
It’s not sexy to fight over money with your spouse and keep you awake in the middle of the night.
When money is tight and financial surprises come up, youcan barely make ends meet. You and your partner could have lots of economic pressure and stress.
Even thinking about that causes anxiety.
Saving could relieve the tension and leave you some breathing room. So, to avoid the endless money arguments, start saving and increasing your cash reserves.
Trust me; you won’t regret it.
3. Plan For Big Purchases
We all have desires in life. And there is nothing wrong with it.
However, going into debt because of big-ticket items is simply not worth the financial stress.
Whether it’s the new car you need for work or the living room furniture sets you have been longing for, opening a specific savings account for the expenditures is vital.
“Do not save what is left after spending; instead spend what is left after saving.” – Warren Buffett
Next time, when you need to make an expensive purchase, pull the money from the designated savings account without guilt. Plain and simple.
4. Save Money For College Education
Higher education might unlock better job opportunities, especially in some industries, yet it comes with a hefty price.
Whether saving money to fund your child’s college education or yourself, it’s better to start saving money early as student fees require a considerable amount of savings.
You or your kids can graduate from college debt-free with early financial planning.
Some couples even start thinking about the 529 college savings plan before pregnancy. A 529 plan is a tax-advantaged savings plan for future qualified education expenses.
It’s never too early to start saving for higher education.
5. Have Expanded Options
Many people hate their 9-5 jobs, but they keep dragging their tired body to work because of money.
It’s hard for them to quit without ample savings, especially for those living paycheck to paycheck, let alone pursuing their dream career.
That’s why saving money is important.
If you have a back pocket to cover your living costs, you can quit the job that gives your anxiety and depression. Find a job you like, go back to school, or start a new career to fulfill your ambition.
You know you have options when you have a decent amount of money saved up. And the possibilities are NOT just limited to career choice.
Not happy with your flatmate? Find a better place with lovely people or live alone. No biggie.
Want to invest in a profitable business? Your savings can help you.
Develop one of the best financial habits in your best interest – saving money, and thank yourself later.
6. Save Money For Enjoyment
Saving money doesn’t have to be serious all the time!
Having fun is a perfect reason to save money.
It gives you the freedom to choose what makes you happy and have fun in life without buyer’s remorse.
If you have been following my blog, you know I am all about a financially balanced lifestyle.
Putting money aside in your savings account every month DOESN’T mean you can’t spoil yourself with a soothing spa treatment, go to your favorite concert, or have a long weekend road trip.
Enjoying your life actually motivates you to save more in the long run.
7. Save For Major Life Events
Big life events could be costly and break the bank if you are not financially prepared.
Saving a significant amount of cash for your dream ahead of time could decrease the worry and encourage positive thoughts.
For example, you might want to plan a beautiful wedding or have a child at some point in life. Both big life events are not cheap.
On top of that, there are millions of things to do before tying the knot or bringing up sprogs. You will never want money to be in the way.
8. Pay Off Debt
Debt (e.g., student loans, mortgages, and credit card debt) is the best way to hurt your financial future. That’s also why many people are struggling to stay on top of their finances.
Living on expensive debt without paying it off on time is not a lifestyle if you ever want to gain financial independence. In order to get out of the vicious cycle, you need to create a surplus. That means you need to save money in advance (at least $500) even you are already in debt.
Setting aside a little bit of money every month will add up and surprise you by the end of the year. So you don’t have to borrow money next time when you desperately need money.
9. Save For Your Dream House
If you have dreamt of having your own home, start saving money early could make your dream come true.
You could enjoy many benefits when you have a pile of savings (like 20% of the purchase price) for a down payment.
Some benefits are like:
- Better interest rates when taking a home loan
- No need to pay private mortgage insurance
- Fewer mortgage payments
The more down payment you can save, the better, for the obvious reason.
That said, you can decide the savings amount for your first home based on your current financial situation and savings goals.
💡 Note: Apart from the down payment, first-time homebuyers have other house-related costs and fees.
Also read: How To Save Money On Rent
10. Prepare Retirement – The Importance Of Saving Money Early
There are plenty of reasons that you should save money early. And your retirement plan makes a good one.
A recent survey from Bankrate shows over half of the American workers say they are behind on saving for retirement, more than one-third of Americans don’t have a retirement account, and 51% of Americans have taken an early withdrawal.
You might want to ask yourself the following questions.
– Do you want to work after retirement because you want to, not because you have to?
– Would you like to enjoy your golden years comfortably without money stress?
– Where do you expect your income to come from when you are too old to work?
If you start putting money aside when you get your first job after college, you will need to save much less in the future.
You might have already taken advantage of the employer-sponsored retirement plan, which is excellent.
But adding a backup savings plan to your retirement planning, you could have all the financial security and freedom you deserve.
Remember, the possibilities are unlimited when you have the time and money.
11. Earn Compound Interest – Make The Saved Money Work For You
The power of compound interest is an easy, stress-free, and automatic way of building wealth for your future.
Compound interest (interest earned on interest) means you can make a big chunk of money plus the money you originally put in as the interest accumulates over time.
But if you have zero savings, you will not see the magic.
Although compound interest is powerful, it takes time. You wouldn’t see the instant profit.
💡 Note: The point of saving here is for your future wealth. Before building your wealth, planting seeds is essential.
Stashing your savings in the right place will make your money work for you over time.
Are you ready to beef up your savings?
12. Gain Financial Independence
“In fact, what determines your wealth is not how much you make but how much you keep of what you make.” – David Bach
Is financial independence your ultimate goal?
If so, you should know the importance of saving money for the future.
You can choose the job you like, move to your favorite neighborhood, live your preferred lifestyle, and help your family members without worrying about your next paycheck.
Sounds too good to be true?
Many people have achieved financial independence and accumulated wealth through hard-working, smart saving, and savvy investing. Why not you become one of them?
FAQ – Why Is Saving Money So Important?
Why Should We Save Money?
If you are unsure of the importance of saving money early, think about your financial goals in life (such as buying a townhouse in a lovely neighborhood, paying off your student loan, or having a comfortable retirement).
Saving money can help you achieve these goals faster and give you peace and flexibility when an emergency comes up.
Plus, it’s also a great way to break up with debt.
It’s a huge relief when you know you CAN cover your living expenses, pay for emergencies, and have a little bit of fun whenever you want without debt and guilt.
All of the reasons above have shown you the importance of saving.
How much should I invest in my savings plans?
The amount of your savings account depends on many factors. It varies from person to person.
Here are some important factors to consider when it comes to saving.
- Your financial goals (short, middle, and long term goals all count):
- Current financial situation
- Your spending behavior
You could also have more than one savings account for your money goals. For example,
Why Is It Important To Save Money At An Early Age?
To put it simply, the early you save, the more you have, and the less you will need to save in the future.
When the miracle of compound interest happens, your money starts to work for you.
Besides, when you have a significant amount of cash sitting in your savings account, you don’t need to take expensive credit card debt or personal loans.
Why Is Saving Money Important For Students?
The habit of saving can benefit studentsin the short term and long term.
First, saving could help you spend money wisely and stop buying things you don’t need.
Second, You can have a smoother start after graduation when setting money aside as early as possible.
Third, you can use the saved money to buy a car for work, pay off your student loan, or become a homeowner as you wish.
Finally, having extra cash in your savings account would help you deal with life emergencies with financial confidence.
In short, saving money can make your life fulfilling in the present and future.
Why Is Saving Money So Hard?
Let’s face it. Saving is NOT easy whether you earn $42,000 a year or $120,000.
Many reasons cause people to remove saving from their priority lists.
Here are some common roadblocks.
– Saving takes discipline and needs sacrifices.
– The saving interest rate is low.
– Borrowing becomes easy and cheap (it depends).
– You are not in great financial standing to start saving.
– You have lots of debt.
– Living paycheck to paycheck makes saving hard.
– You spend more than you earn.
– You have a low income and struggle to pay your bills.
– You think building up a savings nest egg needs a lot of money to start.
What is the most challenging part of saving money?
You know saving money is important, but you can’t save if you don’t have money to save.
That’s probably the most obvious challenge of saving money.
But did you know you can open a savings account with as little as $1?
Did you also know there are many ways to make more money if you are willing to put some effort into it?
How To Make Easy Money By Reading Emails (Just Open & Click)
Final Thoughts – The importance of saving money early
Understanding the importance of saving is the very first step.
Saving money is important as it comes hand in hand with financial security, stability, independence, and freedom.
Additionally, having the cash upfront, you can easily deal with financial emergencies and meet your financial obligations.
You might not have complete control of your life, but you CAN gain control of your finances with a bit of financial planning ahead.
If some of the reasons in the post resonate with you, pay off your debt, live within your budget, prioritize your savings goals, and build wealth.
Keep reading: Which Payment Type Can Help You Stick To A Budget?
“Personal finance is only 20% head knowledge. It’s 80% behavior!” – Dave Ramsey
I hope this post can give you some good reasons to start saving money today!
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