“Everyone needs to build wealth and that’s why saving money is important.”
That’s honestly not a bad answer to the question why should I save money?. But I feel like it doesn’t quite deliver when it comes to communicating the most vital benefits of saving money.
Enter this article… I will attempt to help you understand why saving is important even if you don’t necessarily have any financial problems.
After all, saving money is for everyone. Not just those on a low income (but they, in particular, need it more than anyone else).
So, let’s get right into it!
1. It Reduces Stress
Well, that may seem weird at first glance, but it’s actually something that everyone who starts saving money methodically experiences. No more stress about money.
Money can help you access a lot of luxuries. But the lack of it can open the doorway to all kinds of miserable situations. Poverty is no fun.
In the middle, you have enough money to ensure that you put food on the table, but not enough to sleep well at night. That’s not an enviable way to live.
Saving enough money every month to ensure that you steadily increase your wealth past the point of an emergency fund is one hell of a way to reduce stress.
There’s no denying that the point where that happens will vary for many. Some may just want to create an emergency fund to live off it with no income for half a year if they need to.
Others may be much more conservative with how much they need to be saving. Especially if they have accounted for multiple far more serious scenarios than just being laid off from their jobs.
So, of course, one’s level of stress when it comes to money depends on their temperament. But setting budgets and starting to save money for a specific purpose can at least ensure you have done everything you could to not fret over the little things.
2. It Allows you to Pursue New Things
No matter what kind of income you live off, saving money gives you access to many things. Some would argue that this is the only reason why saving money is important.
It always amazes me how some simple rules about spending money can change one’s financial situation for the better to the extent that they usually do.
Setting budgets and having something to strive for gives you the opportunity to buy or do things that you previously couldn’t.
It doesn’t make any difference whether that’s simply buying a new and better car or taking your dream vacation. With time and discipline, everything is possible even if your employer doesn’t give you that raise.
3. It Can be Turned Into Investing with Minimal Effort
Saving isn’t investing. But the simplicity of investing your money in the stock market with low risk and great steady returns can make it feel like it is.
Have you heard of index funds? They’re pooled money that professional portfolio managers invest on your behalf.
Not only do they offer the greatest performance over the long-term with an outstanding average return among mutual funds, they are also designed for people who want to turn saving into investing.
That’s because, with saving you usually transfer money to a savings account monthly. With a brokerage account, you can do the same by simply transferring money from your bank account to it and then put it into an index fund.
Alright, it requires one more step… It’s still pretty easy as saving though.
The point is that if you are into saving but not investing while we live in a world where index funds are a thing, it is like leaving money on the table. And not for a good reason when it’s so simple to invest nowadays.
Saving just makes it easier to start investing because for one you have the money to do so and you will only need to take one more step.
Just remember to only invest what you won’t need for a couple of years if you put your money into a foreign stock market. The currency exchange rates (the fees that you pay for converting one currency into another) can eat away your profits if you make too frequent transactions.
4. It Affords you an Early Retirement
Many get into budgeting and saving money with one and only goal in mind; to retire early.
After all, you won’t be saving money just for the sake of doing it, but for a more comfortable life. And time grants you the right to one.
By saving money to retire early, you can buy time to spend with your spouse or and your kids, pursue new hobbies (or continue old ones), start a business, etc.
You only live once and what you do now determines your future. So, take this opportunity to act on this knowledge by saving money now to retire earlier. It’s the greatest goal you can strive for when saving money.
Conclusion
No doubt, there are more reasons why saving money is important for you but these 4 are the ones that apply to most people.
Who doesn’t want to be less stressed, pursue new things, invest as easily as they save, and retire early? There must be at least one of these benefits that make saving important for you.
Now, I hope you enjoyed going through our 4 reasons why saving money is important and that you take the next step by getting familiar with budgeting.
Please share this article with others by using the social media buttons below if you liked it. It will only take a second!
Thank you for reading and I’ll talk to you the next time…
Disclaimer: This information should not be viewed as financial advice. You should consult a financial advisor or do your own due diligence before you invest. The owner of this website and author of this article are not to be held liable for any undesired result by anyone who uses this information that is provided here in any way.
