With a lot of emphasis being placed on savings. You maybe asking yourself why the topic has become so popular and why there is so much pressure to save money. If you can afford to pay for your basic needs and have enough to pay for luxuries as well, why should you worry about putting aside some of the money each month?
There are variety of reasons to begin saving money. The reason depends on your personal circumstance as different people save for a different reason. In this article we outline different reasons that should make you consider saving your money.
1. Save for an Emergence Fund
As we can’t predict the future, it is very important to have an emergency fund available to cover unexpected expenses that may come up as well as providing yourself a safety net in case of an emergency. This can cover unexpected car repair, medical bills and other unexpected financial events that may occur such as sudden job loss. Your emergence fund should ideally be able to cover at least three months of your expenses. The primary objective of emergency fund is to help for your living costs (bills, rent etc.) if you were unable to work for a period of time without going into debt.
2. Save for Retirement
At some point later in our life we are all going to retire. However, state pension alone is not going to be enough to live comfortably therefore, you will probably need personal savings and/or investments to ensure you have enough money to live comfortably. You should also start saving as soon as you can because the sooner you begin saving, the less money you are going to need to save in the future. Also, the more you put aside in your savings the more interest you are going to earn overtime.
3. Save for a House Deposit
Another reason to save money is for a deposit on house. With house prices rising year after year, your negotiating power for low-interest rates on mortgages depends on the size of the down payment you have. You are likely to receive favourable mortgage interest rates if you have a significant down payment towards your home. The more money initially put towards the house, the less money you are going to need to borrow. This will make your payments more affordable and reduces the length of time you have to pay your mortgage.
4. Save for Your Education
Another reason to begin saving is for your future education. Each year more people return to school to earn their masters, study a different degree or even becoming chartered. If you are interested in going back to school for yourself, you should think about saving for more than just tuition. If you are considering going back into full-time education, you may also want to save up to cover your living expenses. Although there are student loans available to help you with higher education tuition fees, they are generally not enough on their own to cover all your living expenses. If you are a parent you may also consider saving for your child’s tuition when the time comes.
5. Save for a Holiday
You can also save to have fun and take a break from work or education. If you have family that lives on the other side of the world you can also save to visit them. Travelling is another reason, you can save up for an adventure such as tour of Asia, a wildlife adventure in Africa if you are a nature lover. It’s better to pay for your holiday upfront as you don’t want to be paying off your trip for years after travelling.
6. Other Notable Mentions
- Save for a new car.
- Save for investment.
- starting your own business.
If you are ready to start saving read Top Regular Savings Accounts: Earn Up to 5% Interest on Your Savings.