It doesn’t matter what your religion, race or society is; money is a universal legal tender for business transactions. So it plays a huge influence in our lives from birth to the time we die. From buying groceries, clothes and home appliances, traveling to different cities and studying in college, money determines the quality of life people live.
Because of these diverse needs, people work every day to earn money. Whether you are a 9-5 worker or an entrepreneur, you need money to survive and live a good life, and a luxurious one if possible. While it is the widespread idea that you make or earn money to spend on your needs and wants, it is not the only use of money.
Money should not be spent only after it has been earned. It must also be saved. Saving means holding money for a specific purpose for a short or long period of time. Saving also refers to setting aside money for future purchases or emergencies.
Similar to spending money, people save money for different purposes depending on their perceived needs or desires. These goals serve as reasons that motivate a person to keep some of their income away without touching (spending) it for some time.
Five reasons why you should save money
1. Become financially independent
An effective way to achieve financial independence is to develop a culture of savings. Once you can cultivate the habit of saving, you’ll be on your way to financial freedom. By consistently putting money aside, you can make some crucial life decisions without worry.
You are not financially free if your current lifestyle depends solely on your monthly income. It means you can’t do certain things like quit a job with a toxic environment, start your own business, get married, or go on vacation whenever you want because you can’t afford the costs. Instead, you are forced to keep working to keep paying your bills.
But if you’ve been saving money for months or years, you can make any of the above decisions and still pay your bills comfortably.
2. Debt Free
If you are in debt, saving is one way to get out of such a financial situation. Putting money aside every month or week (depending on how you get paid) will help you pay off debt. This money accumulates over time and you can use it to repay the debt.
Plus, relying on credit cards for expenses can put you in debt. Keep some money aside to pay off your credit card bills monthly to avoid having to pay late fees or charges on your credit card. This act is a sign of responsibility and financial discipline.
3. Buy a house
Buying a house is one of the good financial decisions you can make as an individual. In addition to improving your quality of life, it will save you costs associated with living in a rented apartment.
However, buying a house is not easy. It often requires high financial costs. And this explains why many people take out a mortgage. Even so, you still need to make a down payment, even if you take out a mortgage.
To avoid going through the hassle of getting a mortgage, start saving to buy a home. If you consistently keep some of your paycheck away for a few years, you can move from tenant to homeowner.
4. Buying a car or an expensive product
Just like houses, cars and other expensive items, there are high costs, usually above your monthly salary. Still, the cost associated with a car or expensive product (such as home appliances or office equipment) shouldn’t stop you from having them.
The way out is to save for these items. If you would like to own a car without breaking the bank or getting into debt, then you should save for it. Savings allow you to pay for the cost of the car and take advantage of the prepayment.
5. Unforeseen emergencies
Unforeseen calamities often occur when you are least prepared. They happen without warning and require you to spend money that you don’t have a budget for. From health problems and car repairs to family events, unforeseen emergencies can put you out of business due to the expected costs.
To avoid this, savings can help you be prepared ahead. By maintaining an emergency fund account, you can easily offset the costs associated with any emergencies when they arise. By regularly keeping a portion of your income in an emergency fund, you are one step ahead of unforeseen circumstances.