We save, basically, because we can’t predict the future. Saving money can help you become financially secure and provide a safety net in case of an emergency or any circumstance. If you don’t earn much and you can barely pay your bills, the idea of saving money might seem laughable, oh yes sounds funny, right? When you only have $5 left at the end of the month, why even bother to try saving? Because everyone has to start somewhere, and before you know it, your financial situation is gradually going to improve over time.
Saving money is worth the effort. It gives you peace of mind, it gives you options, and the more you save, the easier it becomes to accumulate additional savings. I would be sharing some money saving tips and importance in this article. There so many ways you can save money, at home, at the bank, Piggy-banks (recommended) etc.
Before you begin to save money, you need to ask yourself: How much can I potentially save?
It’s very important that you develop a budget using your net income i.e. your take as it reflects your take home pay after taxes and deductions. A lot of people make mistakes in developing a budget off of their total income with Tax, Pensions deductions. It’s a mistake obviously because you’re budgeting on money you can’t have access to at the moment. Remember your real savings is the difference between your net income and your expenses i.e. what is left after you take home and paying your bills.
Also, when planning to save you need to ask yourself these questions below:
- Are there any variable expenses that you can reduce or eliminate?
- Is there anything you spend money on that you could eliminate and apply towards saving?
Tips for Saving Money
- Save any unexpected money such as income tax return money.
- Collect loose change, keep in a piggy bank and deposit its contents when its full.
- Purchase cheaper off brand items and save money.
- Try doing one less thing you spend expensively on weekly and apply that money to your savings.
- Save lunch money
- Cook and eat at home always, bring your lunch to work and invest that $5-$10 in yourself saving.
- Have a “buy nothing week”.
- Compare costs of major items before purchasing anything
- Coupons are a great way to reduce living expenses. So, try to always get Coupon and also always take advantages of deals.
Importance of Saving
Without money put away in savings and/or investments, you open yourself up to other risks as well. For example, not having enough money to pay for emergency health care may force you into taking a loan that your savings might otherwise have covered. Read below for Importance of Saving.
- Saving for Emergency Purposes: It is very important to have an emergency fund set aside to cover unexpected expenses. This could cover an unexpected hospital bill, car repair, or a sudden job loss. Ideally this should be about three to six months of your expenses. If you are just starting out you should put aside at least $500.00 for this or more if you think you are capable. In addition to this, you need to make sure you have a plan and good insurance in place to help you survive the unexpected financial events in your life.
- Peace of Mind: Who has ever stay awoke between 2:00 – 3:00 a.m. wondering how they were going to afford something they needed? If money is really tight, you might be wondering how you’re going to pay the rent next week, electricity bills, etc. If you’re a little further up the financial ladder, you might be worried about how many months you could pay the bills for if you lost your job. Later in life, the money thoughts that keep you up at night might center around paying for your kids to go to college or having enough money to retire.
- Save for Retirement: Another important reason to save money is your retirement. The sooner you start saving for retirement, the less you will have to save in the future. You can put your money to work for you. As you continue to contribute overtime you will be earning more interest on the money you have, then you put in each month. You should at least be contributing up to your employer’s match and eventually you will want to contribute ten to fifteen percent of your gross income.
- Expanding Options: The more money you have saved, the more you control your own destiny. If your job has you on the verge of a nervous breakdown, you can quit even if you don’t have a new job lined up yet and take time off to restore your sanity before you look for new employment. If you’re tired of living in an unsafe neighborhood, you can move to a safer area because you’ll have enough for a deposit on a better apartment or a down payment on a nicer home.
- Save for Vacation or Luxury Items: This is what you would like to do once in a while, it could be once in a Year or 6 months. You can save up for your tour of Europe or that Caribbean cruise. Additionally, you can be saving for fun large ticket items such as a PlayStation 4 or a new boat. Your negotiating power is stronger if you have cash in hand on bigger purchases. Plus, you do not want to be paying off your trip to Europe in five years. Even if you save up for your vacation, you should try save on your vacation expenses. This is saving for the fun things, and it is often easier to motivate yourself to save this way.
In conclusion, saving money is very important because It gives you peace of mind, expands your options for decisions that have a major effect on your quality of life and eventually gives you the option to retire. Most people who are wealthy got there through a combination of their own hard work and smart savings and investment decisions. You can become one of those people, try saving money from today on, you won’t and would never regret doing so.