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For most people, the year 2020 was a difficult one, and finances were no exception. We are still adjusting to our new normal, and your finances may be in an adjustment period as well.
The good news is, you don’t have to rely on credit as a crutch to get through hard times. Sure, money woes are bound to happen, but planning and developing a savings strategy will better prepare you for life’s unknowns and put you on the path towards financial freedom.
Knowing the importance of saving money is essential for a successful financial future and these 21 reasons why you should save shed light on why and how you can start saving money today!
What Is Saving Money
Simply put, savings is the income you do not spend or the income you defer spending. Setting aside unused income does not have to be boring.
In fact, there are several compelling reasons you should start saving right now. From vacation sinking funds to health savings, or HSA accounts, and retirement-geared investment funds, there are tons of creative ways to plan for your financial future.
Now let’s dive deep into 21 reasons why you should save money!
21 Reasons For Saving Money
Let’s be honest, just because you can make the payments doesn’t mean you can afford it.
Avoid the pitfalls of payments that chip away at your income and, instead, allocate savings to accomplish your monetary goals. Use these 21 reasons for inspiration:
1) For Financial Independence
Independence is everything, and starting a savings strategy will help you reach your financial security journey faster.
Want to pack up your things and move across the country? You’ll need to be financially independent first.
Ready to open that store you’ve always dreamed of? If your finances are the only thing holding you back, saving money will help you achieve the life you’ve always dreamed of.
2) Become Debt Free
Saving money is an essential part of your debt-free journey. Being debt-free means, you have the power to decide where your money goes. Start small and chip away at small debts as you work your way towards paying off larger ones.
3) Plan For Emergencies
Hope for the best, but save for the unexpected. Emergencies are bound to happen and, from unexpected job loss to unplanned medical costs, an emergency fund savings will get you through those tough times.
4) Put Towards Home Ownership
Saving for a down payment on a house is one of the most important and largest financial decisions you will make.
A down payment of 20% of a home’s purchase price is recommended for a down payment. Stay focused and keep your goal amount in mind as you save towards your dream of homeownership.
5) Save Cash For A Car
Buying a new car with cash will save you interest in the long run. Saving a little at a time will have a big payoff when you can side-step payments and interest!
6) For Health Savings Accounts
Individuals can contribute up to $3,550 for self-only coverage and up to $7,100 for family coverage in 2021.
These funds count towards health care costs and offset your taxable income. You can use these untaxed funds to help with copays, prescriptions, and other medical expenses. The best part is, certain HSA funds grow interest, so your savings can potentially make your money grow.
7) Prepare For College Costs
Whether you’re looking to go back to school or send your children, preparing for college expenses today will set you up for a bright future and ease the financial stress induced by higher education. Investing in education is one of the most important reasons to save.
8) Save To Take A Break
Reward yourself for all of your hard work with a relaxing vacation, or take a hiatus from work to unwind and recharge. Set aside funds over time so you can actually enjoy them and live in the moment!
9) Save To Give
Do good by giving back to others. Setting aside savings to help those in need is a wonderful way to share your gift of thrift with others.
10) High-Yield Savings Accounts
Maximize your savings and take advantage of high-yield savings rates so your money can grow. High-yield accounts are a fantastic option for those who want to set aside money for a more extended period of time.
11) Save For The Holidays
Setting aside money over time allows you to enjoy the holiday season and focus on what’s important instead of being stressed about finances.
12) Live In The Present
Practice mindfulness and be intentional with your daily financial decisions so you can make the most of every moment without worrying about money.
13) For Your Family’s Future
Leaving a legacy of financial literacy for your children is an impactful way to set their future up for success.
14) Wedding Planning Preparations
Whether you or a loved one is planning upcoming nuptials, setting aside money ahead of the big day will make a big difference in your stress level.
15) Pursue Your Passions
If money is what’s keeping you from taking an art class or starting your personal training business, this is your wake-up call. Don’t let bad financial decisions rob you of living your most authentic life.
16) Save Money To Make Money
We already discussed the glorious benefits of high-yield savings accounts, but there are a plethora of other financial planning options which allow you to grow your money while you save it.
From 401K’s to Roth IRA’s and Certificates of Deposits, or CD’s, there are plenty of options for growing your nest egg.
17) For Life’s Simple Luxuries
Fun money is necessary for your sanity. Save responsibly for bigger purchases like new shoes or furniture upgrades. Allow yourself to purchase high-quality items in moderation while responsibly saving for these items over time.
18) Save For Travel
Travel may not be possible during a pandemic, but saving a little bit over time will allow you to enjoy globetrotting once it is safe to do so.
Also, saving for travel funds over time allows you to take advantage of airline ticket sales or hotel deals which lets you get even more mileage out of your money!
19) Save For Self Care
From yoga classes to massages, self-care is excellent for stress reduction, but it can be expensive. Set aside little bits of small amounts of money gradually so you can make time to care for yourself.
20) To Side Step Debt
Most financial experts recommend saving 3-6 months’ worth of living expenses. Allocating money a little at a time allows you to beef up your quick access savings funds without relying on lines of credit.
21) Save For Your Retirement
You can save aggressively and retire early or save gradually for your future. Whichever option you decide, saving for retirement will prepare you for the best possible future and give you the freedom to adjust your career and lifestyle to meet your long-term goals.
Importance Of Saving Money For The Future
The future isn’t fixed, and the COVID-19 pandemic has proven how turbulent unexpected financial hardships can be.
While you can’t predict the future, you can prepare your finances to help you navigate uncertainties like economic downturns or personal hardships.
Importance Of Saving Money For Retirement
Even if retirement is decades away, saving now will set you up for a successful tomorrow thanks to the glories of compounding interest.
The more money you can save today, the better off your retirement funds will be long term.
Investing in mutual funds, like Warren Buffet’s favorite, the S & P 500 Index Fund, will help your money grow steadily over time and prevent your retirement nest egg from being chipped away by inflation.
Is having a savings account worth it?
ABSOLUTELY. You need to save money now to safeguard your future. Saving money affords you peace of mind. There are several options for savings accounts to help you meet your specific goals. Contact your banking institution and research competitor rates to find your perfect fit.
What type of savings account is the best?
That depends on your goals. Check out bankrate.com’s top picks for February 2021 savings account options. From traditional savings accounts to high-yield options, there are plenty of avenues you can pursue your savings journey.
Why is it important to pay yourself first?
Prioritize paying yourself first to make financial planning a habit. The save first, spend later mentality keeps you laser-focused on your goals and committed to accomplishing them. See if you can automate your savings deposits, so you don’t see extra money in your checking account and feel tempted to spend it. There are so many excellent financial planning and budget tracking apps to take the guesswork out of saving.
Saving money gives you financial security and empowers you to live a life untethered to debt and payments. Proper planning will allow you to live in the present and help you navigate the uncertainties of the future.
I hope you see that saving money doesn’t have to be monotonous and show you the importance of saving money and the reasons why you should start pursuing your short-term and long-term savings goals now.
Now that you know the importance of saving money, you should start saving now.
Saving Money Related Articles:
- How To Save For A House Quickly
- How To Save Money On Groceries And Household Items
- How To Cut Cellphone Bills Into Half And Save Hundreds Per Year
- The 3 Tools You Need To Save On Your Monthly Bills
- How To Save On Gas