We have heard various reasons why many people cannot save money, but honestly, most of these excuses are actually not valid. Our needs and wants are unlimited and there will always be a reason why we should spend instead of save money today. However, the truth is that the only way to save money is to start now.
In this article, I have explained 10 good reasons why everyone should start to save money early and I hope you understand that saving is for your own benefit.
Do not save what is left after spending but spend what is left after saving – Warren Buffet
1. It Creates Some Financial Independence
With some savings to cover your future expenses, you do not have to worry much about relying on someone else. Trust me, with financial independence, you have solved one of the common causes of stress in life. You may have heard that serious stress can cause ulcers, high blood pressure and generally impacts productivity. If you start to save money now, you will have some financial security in the future. No wonder why some researchers concluded that savings impacts happiness.
2. Save to Buy Land or Your First House
Are you renting or staying in your parents’ house? Think about saving some money towards buying your own land or a deposit to buy mortgaged compound.
Whiles some mortgage program allows you to purchase house without any deposit, you get better rates and lower interest cost by making some down payment say 20%. Down payment also helps negotiation as well as your financial ability to consider a bigger and more elegant home.
3. Expect the Unexpected – Emergency
A Chinese proverb says “Do not wait until you are thirsty to dig a well.”
In life you should always expect the unexpected and at any time. This should be one major reason why you need to save money for any unexpected issue. Your emergency fund can be used to cover unexpected car repair, home repairs, medical bills, or support on a sudden job loss. Many experts recommended that three to six months of your living cost should be saved into an accessible account as emergency fund.
Note: Do not put your emergency funds into equity or mutual funds, because these investments are subject to serious risk and you can even lose your entire investment.
4. Opportunity can Knock Your Door
They say opportunity knock but once. If you could build a good savings, whenever an opportunity knocks, you will be able to grab it. Many people’s life have change because they were prepared when opportunity knocked.
Let say a friend approached you with a good business idea and offer you an opportunity to invest with him. You can only grab it when you have enough savings.
5. Save Money to Start Your Own Business
If opportunity does not knock, why not create your own opportunity. Think about saving some money for you to start your own business in the future. It is not always easy to get outside capital for a start-up idea and many successful entrepreneurs started with personal savings.
6. Save Money For Education
Thinking of higher education for yourself or your children, then start to save some money. You do not have to wait for the school offer letter before you think about the tuition fees. You should start to save money towards fulfilling that dream of going to college or university.
7. Save Money For Retirement
The sooner you start thinking about retirement, the better for your future. Retirement is something that happens every day and you should not even image retiring without enough savings to take care of your own needs. Put some money aside for your retirement and at minimum match your employer’s contribution (if possible).
8. Save For Big Purchases
Do you have any plan for a family holiday or a summer camp in Banjul, Dubai, London or Disney? Or better still buying a new car, preparing for wedding etc. If your answer is yes, then start to save money towards these major expenses. It is not wise to take debt and spend it on luxury like holiday or buying a new car.
9. Savings Can Make You Feel Good
It feel good to save money regularly because it gives you the comfort of knowing that you have your finance needs under control. You don’t have to always worry about unexpected expenses. It also motivates as you achieved your saving goals.
10. You Can Give to Others
Giving to others is an act of human kindness that has impacts the health and life of many people. The financial freedom that saving provides can help you feel confident in your ability to give something to others. Giving in ways that are meaningful to you provides another source of good feelings to enhance your life.
How much do you need to save each month to reach your goal?
To calculate your monthly saving amount, simply divide the total amount you need by the number of months between the start and your planned date. For example if you need D12,000 between 01 Nov 2015 to 30 Apr 2016, you will have to save D2,000 per month. This approach can also be applied to other luxury items like new car, expensive jewellery etc.
Remember people who save money regularly, even a small amount are well on their way to financial freedom. You should have at least one reason to save money instead of considering thousand reasons why you cannot save any money. After all, why should you miss out on all of these great benefits?