Saving money seems difficult in such turbulent economic times. Many people are living paycheck to paycheck and feel that they don’t have a single nickel to spare. It is of utmost importance, however, that you try to sock away a little bit of money every month.
One reason to save money is to curtail spending. People spend beyond their means every month. If you cut out things that cause you to spend beyond your means, you will be able to save money, and therefore have the things you want. Small things like choosing to eat at home rather than in a restaurant, and to cook your own food rather than ordering out, can make a big difference. If you spend money on takeout or restaurant food once per week, cut it down to once per month, or take a break and cook all your meals at home. You’ll be surprised at how much money you save.
That’s the how, but what about the why? Why should we try so hard to save money every month? First of all, it’s important to save money in case of some sort of emergency or life circumstance. What if you got hurt, or sick, and you weren’t able to pay your rent, mortgage, car payment, insurance, or any other monthly bill you have? Wouldn’t you feel so much better having the peace of mind that if something were to happen, you have enough money to cover your bills until you recover?
Another reason to save money is so that you can save up for the things you want. It’s hard to buy a house, car, or anything other large item on just credit alone, so having a nice amount of money saved up to use as a down payment will not only make the purchase possible, but it can lower your interest rate and your monthly payment considerably.
Saving money is also important to help you plan for your future. Some people are lucky enough to work for companies that offer 401K or other retirement plans to make it easy to save for the future. If you don’t have that opportunity, it is important to save some money each month for retirement. After your emergency fund, this is the most important reason to save money. You don’t want to work forever, and Social Security benefits are shaky, so having a robust retirement fund is crucial to your later years. You don’t want to have to worry about money when you’re ready to stop working. Because the money in your retirement fund will be untouchable for many years, you can put it to work for you in a higher interest account. If you have a 401K with a company that matches, contribute the maximum.
Another reason to save money is for education – for you or for your children. If you’ve always dreamed of going back to school, it is so much better to save money to make that dream come true than to borrow it from a lending institution. School loans accrue interest daily, and can take a long time to pay off. If you have children, even if they are very young, it is never too early to start saving for their education. Better to have a few years of tuition in the bank than to borrow money that will be not only your responsibility, but your child’s as well.
Saving some money every month is a wise and important thing that everybody should do.
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Tags: finance, investment, investments