Whether or not you’ve put much thought into it in the past, putting money aside for the future can help you in many ways. That said, saving money without a clear goal in mind can often feel a little abstract, as it might feel like there’s no real purpose behind why you’re doing it.
With that in mind, here are some thoughts on exactly why it’s so important to save money, and how it can help you in future.
Image Source: Pixabay
Preparing for an Emergency
It can be hard to picture every possibility when it comes to emergency planning, and there might not even be anything specific that you’d be planning for. However, without a financial safety net in place, something unexpected happening may cost you a lot more than you could comfortably afford at the time.
It could be sudden unemployment that lasts a little longer than you’d hope, you might get into a car accident with no insurance, or you might simply have to cover the cost of an emergency repair around the home.
Having any amount of savings set aside for things like this can help you cover all or part of a sudden expense, so that it doesn’t affect your cashflow too much, if at all. This preparation is especially important when considering that not many people in the US could afford a $1,000 emergency without going into debt.
While you might manage on Social Security when you end up retiring, it’s important to think about how much more comfortably you could live if you add your own savings into the equation.
It could be something as simple as putting a small amount of money into a savings account each month. Your current employer might also offer a 401k that they contribute into on your behalf. If so, consider matching your employer’s contribution as much as possible – it will all add up quite substantially over the years.
If you’re able to cut back on expenses in order to save as much as possible over time, it might even be possible to retire comfortably a number of years earlier than if you hadn’t put aside any savings in the first place. Some people take this idea to extremes, such as with FIRE movement, though there’s no real need to take it as far yourself. Where you can, save what you can afford, and you’ll benefit from it in future.
College tuition and associated costs, like groceries, supplies and textbooks, can really rack up. Whether you’re looking to go back to college yourself at some point, or you’re putting money away for your children’s education down the line, having money set aside can help reduce the financial burden a college education might cause.
With college savings in place, you might find that you’re able to graduate without as much of an impact on your day to day finances, or that you can help give your children an even better headstart as they graduate with less tuition to pay off, or even no tuition at all. Look into a 529 plan if you’re saving for education purposes.
By saving money where you can, you’ll be able to prepare for the unexpected, be able to treat yourself a little more than you would otherwise, and help keep your family secure going forward.