Reasons Why You Should Save Money
It seems that most people know that they should save money but we don’t do it because there isn’t a good enough reason to do it.
Usually we don’t see the value in just holding money until we are in a situation where we absolutely need the extra cash.
One of the worst times this could happen is during a medical emergency or a much needed car repair.
You also don’t want to have worked your whole life and then have nothing to support you once retirement age comes around.
Don’t let yourself get caught off guard, here are the 4 reasons why you should save money:
#1. To Have A Safety Net
What with you do when unexpected expenses come around? Can you spare an extra $500? an extra $5000?
For 99% of people that’s a no.
So it is important that we build a safety net that will catch us when we fall. Save enough money that you could have 3–6 months of income if you lost your job or if you are hit with a huge bill.
If you just do this one thing on the list then, almost any financial problem that could ruin you suddenly becomes trivial.
Save about 5–10% of your monthly income and over time you won’t need to think twice about the money that’s gone and now you have a good sized nest egg to protect you.
Also if there comes a time where you do need it, replace whatever was spent, that way you always have something there to fall back on.
#2. To Use That Money For Investing
Once you have a pretty large savings, you can start employing your money to work for you. A common way of doing this is to invest in the stock market.
If you do this in a smart way then every year your money will grow on it’s own, so let’s say you invest $1000 one year, by the end of that year you’ll have $1100.
Keep investing $1000 a year at a rate of 10% interest and in 10 years you’ll have $18,531, in 20 years it will have grown exponentially to $64,002.
So you can see that investing you money instead of just letting it sit somewhere is worth your time.
If you wanna learn more, I recommend sites like investopedia or read books on investing like “The intelligent investor” or “ Buffett: The Making Of An American Capitalist. “
#3. To Buy Something Big
If you save long enough and are very smart about where you’ve put your money, you can use that money to buy your dream car or dream house.
Everyone has a plan in their mind about how they want their future to look and you spend most of your life in a house or driving so why not make them the best they could be?
Remodeling your old home or car can also feel like a big accomplishment.
If travelling is more your thing then save up for a great vacation at a luxury resort or hotel.
To point is to have a goal you’re saving towards, because if you’re not looking forward to anything then you will probably lose motivation to save.
#4. Think About Retirement
When you are old and you reach the age of retirement then you don’t want to just be relying on your social security payments as it will probably not be enough to cover your costs as it is only a fraction of what you got paid while working.
So make sure you are investing in a solid retirement fund like a Roth IRA that some employers with even match your contributions.
When retirement finally comes you can spend your golden years sipping pina coladas on the beach.
Originally published at https://forgefinancialfreedom.com on September 14, 2019.