Saving money is like going on a diet. There is difficulty in starting it but the real challenge is keeping it going, especially when you happen to walk past that delicious figurative cake. In those times, you remind yourself of why you started in the first place. In saving money, your purpose will guide your struggle. If you’re having some difficulty starting or remembering why you started saving, here are the top five reasons everyone needs to save money.
Building an emergency fund is one of the best ways to mitigate damages on your financial situation when the need does come. Emergencies may come in the form of car troubles, medical bills, or unemployment. Although you do in fact save to build your emergency fund, remember that it is different from your actual savings. Your emergency fund should be as much as three to six months worth of living expenses. This amount will make sure you keep afloat in most unexpected situations.
The sooner you plan for your retirement, the better in terms of the amount you have to save and your peace of mind. You’ll also be able to maximise the compounding interest of savings accounts. This means that if you save a fixed amount regularly for a number of years, earning a fixed interest, you’ll get substantially more than you saved. In this way, the longer the time you save, the more your money can earn for you. In the UK, the introduction of auto enrolment pension has welcomed an increase in the number of people saving for retirement according to the Telegraph.
Aside from enrolling in traditional schools and earning degrees, education can be anything that improves your knowledge base. There are a lot of training opportunities to further your career. You can also learn new things for business ventures or even leisure. Increasing your skills and knowledge is always a good idea and a worthy cause for saving money. Sometimes, the returns can even be apparent in terms of your increased market value.
If you have a family, saving for your children’s education is also becoming increasingly necessary because of the continuously rising cost of tuition fees.
Most people dream to own their own home eventually. However, according to the Independent, the percentage of people owning their home in the UK declined from 73.3 per cent in 2007 to just 63.4 per cent in 2016. One of the reasons cited for this was the sharp increase in house prices relative to people’s income. Because of this, saving money is one effective way to hold on to that lofty dream. Rent prices are also on the rise, giving people an additional push to own their homes instead.
Convenience and Luxury
If you’re saving, you can’t afford to live comfortably — Yes and No. Yes, you’ll of course have to make some sacrifices to meet your financial goals. However, a vacation in Paris or a better car can motivate you as much as any other on this list. As a person, you are inherently drawn to things that will make your life feel nicer, even if you have to experience some hardships in the process. Save money to do the things you’ve always wanted to do.
Saving can be difficult but satisfying when you meet your targets. Keeping your eye on the ball when it comes to your reasons for doing it will definitely help. If you’re looking for some helpful cost-cutting tips, here are ten ways to save money. Good luck!