How much you should save depends on your financial goals. You may have a tangible goal you want to pursue, like taking a year off work to travel. In that case, you want to estimate how much you’ll need not only to cover the cost of travel, but also to cover regular living expenses if you don’t plan to make an income during this period.
If one of your reasons to save money is to gain flexibility, you can set a specific amount aside each month (hint: automate your savings) based on what you can afford to save after things like retirement savings and emergency fund contributions.
Roberge says that you could label that savings account your “build wealth fund.” The importance of saving money here is to give you cash reserves that you can use when and how you want.
2. Saving provides financial security
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“I love saving money because it means financial security,” says Kara Perez, who founded a financial education company that aims to empower women by providing them with the tools and education to reach their financial goals.
“Plain and simple, having money makes your life easier,” Perez says. “I save because I want my future self to have the same great lifestyle I have now, and I don’t want to get caught in a financial emergency.”
Perez recommends putting money in both a liquid savings account where you can keep cash for unexpected expenses and emergencies, as well as putting money into something like a brokerage account where you can invest for the future.
3. Saving means you can take calculated risks
Part of the importance of saving money is to build cash reserves so you can take calculated risks with less worry. If you don’t have any savings, it may be harder to pursue certain passions. Take starting a business, for example. To be a small business owner, you’ll need financial backing to get it off the ground.
But if you set a savings goal and contribute to your savings each month, you can explore new opportunities, even if they may temporarily impact your earnings (if you set off as a small business owner, paychecks could be slow to come at the start).
“Saving gives you the freedom to live life on your own terms,” says Matt Becker, CFP® and founder of a financial planning practice focused on new parents.
“When I lost my job three years ago, my wife and I used that as an opportunity to start the businesses we’d been dreaming about, rather than scrambling to find another paycheck as quickly as possible,” Becker says. “We could only make that decision because of the years we’d spent building our savings.”
Why you should save money
The importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things. Pretty good reasons to save money, right?
If you’re convinced as to why you should save money, you can get in a savings groove by opening an online savings account. And good news: It doesn’t take a lifestyle overhaul to become a saver. There are simple ways to save money, which you can start practicing today. Once you’re in the habit of saving, you’ll forget there was ever a time when you didn’t save.
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Source: discover.com