Many of us have at least once wondered why saving money is so important.
Taking care of our financial health has become a hot topic for personal finance gurus in recent years as more and more people are realizing the importance of saving money.
With more and more blogs, articles and advice available on how to manage our money, it has become easier than ever to learn just how to save for our goals.
But why is saving money so important?
Well, let’s find out!
Why Saving Money Is essential – My Top 7 Tips
So many of us have heard over and over the importance of saving money, though often we don’t really understand the ‘why’, which puts us off learning how.
But not to worry!
Today I am going to go through seven of my favourite reasons why saving money is downright essential, and how it can help you!
1. Peace Of Mind
First and foremost, having a savings account that you pay into every month can be a huge relief.
Knowing that you are able to pay for any unexpected bills and living expenses, without sacrificing dinner for a week is a big stress relief.
Imagine if your car broke down and was going to cost hundreds to repair. If you don’t have any savings that you can use to pay the bill with, you are probably going to be without a car for a while.
Whereas if you have been building up the money in a high interest savings account, something like this will be far more manageable and you will get to keep your car on the road! (Which will then save you money on finding other ways to get around).
This peace of mind, and sense of financial security will help reduce your stress levels when things go wrong!
2. Relationship Harmony
Most of us are no strangers to quarrelling with our partners over money when times are tight.
When bills are high and money is low it can put a lot of pressure on both parties, as well as others in the house, like your children.
Having money saved up can help relieve some of these tensions. It gives you a bit more security knowing that, even if you don’t earn as much one week, you can still afford all of your bills by using some of what you have saved.
This is why saving is important. It can benefit multiple areas of your life, even those you do not consider, such as the harmony of your relationship.
Possibly one of the greatest reasons to start saving money.
Sure you may have a pension in place, but ensuring you have plenty of money saved by the time you retire just gives you a little more financial independence.
Especially when, according to The Motley Fool, many pensions don’t even cover your cost of living!
By preparing your own ‘pension pot’ throughout your working life, you are allowing yourself more financial security and freedom.
Not to mention if you budget well enough you could do something exciting like finally taking that road trip across America you have dreamed of since you were a teen. Helping others in your family or even spoiling your grand-kids and being the ‘cool’ grandparents!
There really isn’t a downside, as it will always be able to help towards something. Even if you decide to spend it on something completely different to my examples.
This is why it is one of my favorite reasons to save money!
4. Long Term Security
This one kind of ties into the first reason, peace of mind. And for me, it’s actually one of my top reasons to save money.
When you prepare for your future by putting aside money regularly, you are also giving yourself long-term security at the same time.
Knowing that you can pay off all of your bills regardless of how much you made that week, and still have some small spending money, will give you great financial comfort and security!
It can prevent you from needing to use loans and credit cards for large expenses which you cannot afford otherwise, which in turn reduces the amount of debt you may end up in.
Emergency funds are especially tailored to this kind of security, they are there in the event that you lose your job or cannot work for health reasons.
Having that pot of money prepared for worst-case scenarios, can be the difference between managing, or going into debt. Or even worse, lose your home entirely.
Helping you avoid unnecessary debt is my goal here, which is why you will always hear me preaching the benefits of saving money from the rooftops!
5. Enjoying Life
Having money in savings allows you more freedom to enjoy things in life, without worrying about consequences.
This may sound contradictory, going from telling you why saving your money is important, to saying it is okay to spend it. I get it!
But just because you put money into a savings account, doesn’t mean you have to use it in emergencies.
If something comes up and you want to do it, whether it is a day trip, a music festival or a two-week holiday, it is okay to use some of your savings to do it!
I’ve said it before and I will say it again, having money saved is all about balance.
Obviously you don’t want to be dipping into your savings faster than you can put money into them. But it is okay to occasionally use that money to go out and enjoy yourself.
If you save militantly but do not allow yourself enjoyable experiences, it won’t be long before you lose the motivation to save at all.
Some people even like to set themselves a completely separate savings goal, just for the fun things they want to do!
With simple goals like set aside $10 into the ‘fun’ pot for every $50 into your emergency funds. Then once your ‘fun’ pot reaches $100 you can go for a spa day, or a shopping trip.
Simple things like this are great ways to keep yourself motivated and excited about saving.
6. Life’s Curve balls
This is probably the biggest motivator for most people needing savings, and really illustrates the importance of saving money.
More often than not, life doesn’t quite go according to plan. In many instances this isn’t a problem and we manage. But sometimes things are a bit more serious.
Having saving pots, such as emergency funds and sinking funds, which are in place to help you deal with life’s curveballs.
Whether it is forking out for a new car, or because you are out of work. Dedicated savings pots can help bail you out of serious situations, and are always a great thing to have!
For example, people typically have 3-6 months of living expenses (or more) in their emergency funds.
This covers everything from your rent, to your TV subscriptions, and is there so that if you lose your job, or are off ill, you can still afford to live.
It takes away some of the pressures that can come with these situations, and allows you time to get back on your feet.
7. Achieving Financial Goals
What do I mean by achieving financial goals?
Well, that is entirely up to you.
Building up your savings is a great way to finally achieve your financial goals, whether it is paying off a debt, going on holiday, or saving enough money to buy a home!
Everyone has different goals and aspirations, so this is one tip which you will have to reflect on, and decide what exactly your goals are.
When you work towards your savings (and other money goals) not only are you allowing yourself to achieve all of the above.
But you also get to experience a sense of accomplishment each and every time you smash one of your goals!
And it is hitting those goals, and feeling this accomplishment, which will motivate you to continue onto your next goal, and the next.
Why Saving Money Is Vital – Your Questions Answered
When we begin to take our personal finances seriously, many of us make the mistake of underestimating just how important it is to have money set aside.
So often we find ourselves with a lot of questions, especially when we are first working on our budgets. And many people do not know who to go to for answers.
Many people are still quite private, or secretive when it comes to talking about money, almost as if it is taboo. But I am here to help, despite the stigma.
In this next section, I am going to answer a few of the biggest questions I find people asking when starting out on their budgeting journey!
What Should I save Money For?
You can save money for just about everything!
Some people will have one high interest savings account for everything, while others break it down into multiple categories. Such as;
- Emergency funds
- Sinking funds
- Holiday fund
- Mortgage funds
And many many more! What you save for will vary based on you and your households needs, but I would recommend working on at least an emergency fund and a sinking fund, just for security and peace of mind.
Come the New Year, why not dig into a no spend January challenge and see how much money you can save in just 31 days?
Why Is It Important To Start saving Money Early?
The short answer is the sooner you start saving, the more you can save.
If you keep putting off building up your savings then you may find yourself in a situation where you cannot afford a bill, and end up taking out a loan or putting it on your credit card.
Whereas if you had started saving straight away, you may have been able to foot the bill without a hitch. Or at the very least, the amount of money on your credit card may be less!
Starting to save as soon as you are able is always the best course of action! The longer you wait, the less money you will have when you really need it.
What Are The Disadvantages Of Saving Money?
Given all of the advantages, it can be quite difficult to imagine the disadvantages of saving money. But they do exist!
The two main ones being that if you commit to saving, you will have to make sacrifices in areas like socialising and buying unnecessary things.
This isn’t to say you are not allowed to do either! But cutting back on these sorts of spendings can be invaluable when it comes to boosting your savings up.
Should Students Save Money?
One thousand percent yes!
As we already mentioned, the earlier you start saving the better, and this includes students.
Starting to save for the future while you’re young allows you to build great habits, which will keep you out of financial stress later in life.
Another reason why saving money is important for students, is knowing that when you graduate you already have a small sum of money saved to get you going.
Whether it is buying an apartment or a house, or saving for a car to get you to work every day.
Not to mention, as a student, you can still be caught out by unemployment, sickness or any other curveball life wants to throw at you.
Preparing yourself from the get go will give you the most security you can get.
The Importance Of Saving Money Cannot Be Overstated
Running a blog on money saving, being frugal, and budgeting, it’s pretty obvious that I value saving and preparing for just about every expense that could come my way.
But I hope that you are beginning to as well!
The importance of saving is something I don’t think I can ever stress enough. It has saved myself, and so many others from going into debt because of surprise bills, or having time from work.
And is something that everyone can benefit from.
Whether you are 18 years old or 50, working your first job, or your seventh, by deciding to start saving from today you will reap so many benefits.
Not only to your financial health, but also your mental well-being, as you have to stress less and less about affording your bills or other expenses.
Saving your money is important, and hopefully these benefits are enough to convince you to start saving for your future too!
Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.
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Last Updated on 8th October 2021 by Emma