There is a saying “Money can buy anything.” Well, money might buy anything but it is not wise to spend all your money to buy everything. Saving money is a great virtue. Moreover, if you can save money from your earnings then it can give you financial freedom in the future. Saving money gives you peace of mind; you will have more options, and saving money is definitely worth the effort.
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Reasons Why You Should Save Money
There are many reasons available to save money. Below are some important reasons you should save money. Let’s check them out!
Peace Of Mind
If you don’t earn too much or if you have a tight budget then you might be wondering how you can afford a thing that is out of your budget. Moreover, you might be wondering how many months you could pay the bills if you lost your job. So money thoughts will keep coming to your mind as long as you don’t have financial freedom. If you can save money from your earnings then it will diminish your financial worries. If your monthly rent is taken care of, if you know, you can get by without working for three to six months, if you have a saving account for your children’s education then you will have peace of mind and you can sleep better at night.
Saving money means you have expanded options at the time of danger. The more money you can save, the more you control your own fate. For example, if you have strong savings then you can move to a better place or you can afford better education for your children. Moreover, if your job has you on the verge of a nervous breakdown then you can take a month off or you can leave the job and look for a new job of your liking. Strong savings will give you the opportunity to pursue your dream. If you become sick and if your insurance doesn’t cover the medical expenses then you can pay the bills from your savings. Money might not solve every problem but it can keep you out of distress.
Savings Work For You
We work to earn money. In fact, we put in hundreds of hours of work each year to earn the money. So if you save money from your earnings and when your savings become large then the money will start working for you. If you can stash your funds in the right places then you can earn money without working too much. Invest money in the right way and eventually, you might be able to stop working in the future. If you have a high income and less expense and if you save money properly then you might be able to retire in 10 years where other people retire in 40 years!
Being a rich man and being financially independent is a totally different thing. Financially independent means you have enough money/savings to back your future. If you have limited income then you won’t be able to become a rich person but you can become a financially independent person with proper savings. Financial independent give you the freedom to make choices in your life like you can take a vacation whenever you want, you can leave your job to complete your education, etc. Moreover, if you have a large savings then you can start your own business. So, you don’t have to depend on a paycheque.
Buy A Home
If you have a dream of having your own house then savings can help you a lot. You won’t be able to buy a home without having some money of your own. The bank won’t lend you money to buy a home unless you make the down payment. So you must save the down payment and the down payment needs to be at least 5% of the purchase price of the house. So, when you have at least the down payment of the house then the bank will consider lending you the other 95%. There are other costs and fees you have to pay if you want to buy a home so you will need an additional 5% for those costs. Therefore, proper savings will open the door of opportunity to owning a home.
Buy A Car
Buying a car is quite similar to buying a house. You will need to make the down payment first and then you can get a loan from the bank. You can make the down payment from your credit card but it will cost you a lot. So if you are looking for a cost-efficient way then saving money is the best option. You should try to make as large a down payment as you can and then try out other available options. The more you can pay with your money the less you have to borrow from the bank.
Get Out Of Debt
If you are in debt then saving money can help you get out of your all debts. If you depend on credit cards every time you are in danger then you won’t be able to clear the debt of the credit card/bank. So before, you start paying everything with your credit card; try to cover the expenses with your savings. It will save you extra money as you don’t have to pay the interest rate from the credit card payment. So before you start aggressively paying off your credit cards try to use your savings to make the payments.
If you want to have a relatively stress-free financial life then there is no alternative to saving money for the future. You can save money for annual expenses like money for gifts, vacations, vehicle maintenance, minor home repairs, fixing appliances, property taxes, income taxes, and many more. If you save money to pay these expenses then you don’t have to worry about paying these expenses using a credit card. Moreover, you don‘t have to worry about how you can manage all these expenses that are not in your budget.
We all pray and hope to avoid the emergencies but we all know that we might have to face one or two emergencies in a year. There might be a medical emergency, or you might need to make an emergency trip, or there is a car accident, or you need to repair the house. All these emergencies are expensive and require instant money. So, if you maintain savings then you can easily handle these emergencies. Therefore, prepare yourself for emergencies like these by saving some money.
How To Save Money
Many people say that saving money is hard, but it’s not. If you properly save money then you can easily save lots of money in a short time. So if you are wondering how you can save money then you can follow the below types.
1. Make a list before you go out shopping, this way you will be able to spend money on things that are required
2. Open a bank account in a bank that offers no-fee checking, a wide ATM network, fewer account maintenance fees, and good online banking services
3. Turn off unnecessary or ideal electronics products to consume less electricity and same money on electricity bills
4. You can sign up for free customer rewards programs so that you can shop products at a discount price and receive various products for free as a gift
5. If you are a credit card user then don’t forget to pay off your rewards credit card in full each month to avoid any penalties
6. Stop spending big money on the entertainment purpose of your children; instead, save money for their future educational expenses
7. If you are applying for a credit card, make sure you negotiate rates with your credit card company and try to lower the interest rate
8. Stop drinking more soda or juices as they are more expensive than the water; start drinking more water as it is cheap and good for health
9. Stop eating fast foods; start eating healthy homemade foods, they are less expensive and good for your health
10. Try to buy your grocery items from stores that offer discounts or sell products at a discount price than the market/MRP price
11. You should make a maintenance schedule for your home, auto, and appliance so that they can operate nicely and have an extended life; you will be able to save servicing cost
12. If you have unused subscriptions and memberships then cancel them to save the money
13. If you shop online frequently, then don’t forget to remove your credit card numbers from your online accounts, it’s a temptation to make an online purchase every now and then
14. If you have a holiday shopping then try to do the shopping as early as possible because at the time of holiday the price of every product increases and it will cost you extra money
Regardless of what is your income or financial condition, saving money is very important. If you have money then the whole world is in your hand. You will have lots of options to make the right decision. So, develop the virtue of saving money and start saving money for a better future!
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.