Why you should save money
Why save? Even with a relatively large income, you should be careful not to spend all of your money at once. You may be tempted to use up any leftover income after your bills are paid for your own enjoyment, but you should be wary of doing this. There are many potentially costly aspects you need to be wary of. Some of these may not even seem immediately obvious to you. In this article, we plan to present several of these to you in a succinct manner.
1. Emergencies & Health
You could quite easily become ill very suddenly through no fault of your own. Medical expenses can be quite considerable and are definitely worth taking into account for your financial well being. Even if you have trustworthy insurance covering to pay your expenses, whether you pay for it yourself or your work does, you should be careful. The people overlooking your case could quite easily reject you, or cover a tiny portion of your fees. This is why it is essential to keep extra reserves just in case.
2. Unforeseen circumstances
Other than those affecting your health, there are other possible events that may inform your reasons for saving. This could range from your vehicle being damaged to your residence being burgled and many others. As we have said earlier, it is quite possible that any insurance plan you have to take care of these expenses will refuse payment. You will need to keep extra reserves to make sure you stay stable during these times, especially if these expenses are a necessity.
There are other potential financial burdens you cannot have foreseen that no insurance could apply for. Any legal action taken against you, for example, could put an incredible amount of pressure on you financially. Even if you can cover these expenses, you will need to keep reserves for the bills.
3. Prepare for times of financial hardship
You may find yourself without any source of income. You may have made unfortunate decisions to get to this point, or it may have happened to you through no fault of your own. This could be related to your health, a bad job market, or an economic depression. You will need financial support in the interim. Unless you have someone else to cover your living expenses, you will need to keep something on the side.
4. Take advantage of new situations
New opportunities may arise for you, which you may not have anticipated or even known you wanted. There are so many potential benefits of saving you could not foresee. Sure, you aren’t particularly interested in that new car now, but what if you change your mind? How about discovering a new hobby or passion that may require some financial backing? What if you have opportunities to invest or new business ideas that will need something extra to support? Sure, you may be happy now, but life does not follow a straight path, and you may want to change your direction to try something new. This will definitely require saving money
5. Your own peace of mind
Living paycheck to paycheck can be very stressful. How will you pay your bills? Will you be able to afford healthy food, or have to rely on eating whatever comes to hand? Stress can have a major effect on your health and sanity. Living without that extra pressure clouding over your head could really break you if you are not careful. This is why keeping some reserves can give you peace of mind. You will be able to focus on enjoying yourself and keeping yourself healthy without consistent pressure at the back of your mind.
6. Buying a home
Relying on a rented space as your place of residence can be quite risky. It could cost you a whole lot more in the long run, and you can be forced to leave the premises without any reason! More importantly, you do not have a say in what you can do in the very place you live. Do you want a pet? Or maybe you’d want to have more people reside in the place where you live? Do you want to do any renovations? Is there something currently in your residence which is bugging you? All of these could easily be viable if you purchase your own home!
Buying a home is also the ultimate financial investment. This point really highlights the importance of saving money. You can safely tuck away your extra dollars without having to store it in the bank. The housing market is almost always on the up! Even after the housing bubble burst in 2008, home prices soon bounced back and have continued to rise ever since! If you are ever in desperate financial need, you can always pass your house along to cover your expenses.
Houses are also a good investment for your family. If you want to have a large space for your spouse and children, houses are almost always the way to go. You can also ensure your children’s financial future is safe by relying on your home. If they have financial troubles, they can always come to live with you. After you pass away, they can use your home to cover their own unforeseen expenses.
Taking a break from work and having a little something to look forward to can be important. This is why travel can be a revelation for many people. Whether this is experiencing new cultures, trying new things, or otherwise just simply relaxing, travel can give it to you. However, it can come at quite a cost. Paying for tickets, places to stay, eating at restaurants. The costs can quickly stack up and leave you paying a considerable sum. This is especially true if you are going to hot tourist centres as prices tend to skyrocket the more desirable a location becomes. If travel is important to you, money is essential. After all, you will most likely have no other source of income while you are there.
8. Future of your family and loved ones
All of the past examples apply to not only you but the people around you as well. Maybe your parent is ill, and they need extra support. Maybe your friend sees a new business opportunity for them, which could use a little bit of financial aid. If you want to make sure the people you love are well, you may need to support them in times of need.
Most importantly, if you want a family of your own, keeping financially solvent is of the utmost importance. Even if you are financially stable and healthy on your own, having a family in the future is always going to cost you a whole lot more. You will need to pay for their living expenses. You may need to pay for their gifts, and for travel during holidays. All of the expenses you usually have will multiply greatly with a family. You will also need to pay for their education, whether it is private schooling or university. You will need to ensure they will have a place to live (as we stated earlier). Most importantly, you will need to ensure their own financial future is stable. You could do this by lending them money during your lifetime, or ensuring they have something after you pass away. Therefore, if you want a family, saving more money than you may need is a must.
9. Pensions for retirement
Retirement is your most important financial consideration when saving money. There are many options available to you for retirement, most being investment funds. Most popular of these are the 401(k)s, IRAs, and many more. What is important is you choose the right one for you. It is best to start young, as the sooner you start, the more compound interest you will have. Having a pension is obviously essential for your later life. You will have no other source of income. This may be because you have decided that you have had enough of your work life, or you physically cannot work. In any case, you will need something to fall back on, and the interest you get on your bank savings will not cover it.
10. Setting yourself up for financial freedom
To add to the previous discussion, if your true wish is to retire early, saving is the only way to go. If you have decided that the rat race is not the life for you, you will have to put your nose to the grindstone for some time. You will have to plan your saving goals well ahead of time. Once you have collected a sizable sum (say, in the millions), you can put your money in aggressive investment funds. The returns you will be able to make from these sorts of funds with large investments can carry you your entire life. All of the previous points we have mentioned could be covered if you spend a few years working hard and making the right decisions. You may even still have plenty of leftover for you if you play your cards right.
So there you have it. There is a shortlist of reasons for you to consider saving your money. Spending all your income at once can restrict you from many future possibilities. We hope you consider again before making unnecessary expenses.
- Check-out Financebrokerage’s comprehensive Review on Pepperstone
- Trading Instrument
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!