At the end of every month, it’s always the same question – How much did you manage to save? But then, the thought also crosses your mind… Why the need to save, when you earn to spend? If you find yourself cash strapped, there’s the always the option of borrowing some money.
Different people save for different reasons. We’ve discussed 5 reasons you need to start setting aside a few dollars each month.
1. Emergency Funding –
Emergencies are unexpected and uncalled for. A family member might take ill, your roof might start leaking or your drain pipes might get clogged, your car might be involved in an accident or you might have to make an emergency trip. It’s worse if you get laid.
It is impossible to tide over these unexpected expenses if you don’t have any savings to fall back on. So, that’s one reason you need to start saving money.
2. Retire in peace –
This is why most people save money. After working everyday of your life, you dream of living those days of retirement in peace and comfort. You don’t want to be paying up debts until the end. Neither do you want to take up a part time job to make ends meet for your family.
You can always consult a financial advisor or coach and chalk out a savings plan for your retirement. You can invest your money in places with high returns.
3. Fewer debts –
Credit is easy to obtain today, but it’s not without the condition of repayment. If you keep borrowing for every unexpected expense, you take on more and more debt making it hard to meet those monthly payments. With reserve fund, you can pay up a few expenses against your credit card and the rest from your savings. At the end of it, you will have a great credit score.
Building a reserve fund will also keep tabs on your spending habits.
4. Financial Independence –
When you have your own spending money, you can call your own shots. You can make choices for your own life. You can decide to quit your dead end job and enroll at college for a course you’ve always wanted to take. You can buy new furniture for your home or take an exotic vacation with your family.
5. Buying a House –
Buying a house is a dream come true for many. You can get a loan to pay up for your house, but you are still required to contribute at least 10%-20% towards the cost. In other words, you have to pay the down payment if you want your loan sanctioned. Your savings can come handy for this initial payment and also to cover up any additional costs and fees.
The scenario is the same if you are planning to gift yourself a new car.
Given these five reasons, you might also have to save for your kid’s education; higher education is not cheap. By pinching a few pennies early, you will be able to guarantee your kids a good college education.
If you are having a tough time getting your finances in place, you could benefit from the tips and training given by financial coaches. There are a number of places online where you can get free one-on-one coaching.