The importance of saving money cannot be understated. In fact, with so many proven benefits, saving money is one of the best financial habits you can adopt. But, if saving money doesn’t come easy to you, or you just don’t see the point, it’s natural to ask yourself, why is saving money important?
First and foremost, saving money is important because it helps protect you in the event of a financial emergency. Additionally, saving money can help you pay for large purchases, avoid debt, reduce your financial stress, leave a financial legacy, and provide you with a greater sense of financial freedom.
Truthfully, there are countless reasons to save money.
So, if you’re in need of a little money-saving motivation, or just want a further explanation as to why saving money is so important, you are in the right spot.
In this post, I’m going to take a deeper dive into the importance of saving money, and cover the top 15 reasons to start saving today.
Let’s get to it!
Freedom To Pursue Your Dream Career
Have you ever known somebody that was stuck in a job they hate, because they didn’t have the financial freedom to quit and pursue something they enjoy? Well, if they had enough savings, I’m willing to bet that wouldn’t be the case.
One of the most important reasons to save, is to provide yourself with the freedom to pursue a career you love.
When you have ample cash sitting in your savings account, and a pile of investments earning interest, there’s absolutely no reason to endure a situation you hate.
In other words, a big pile of savings gives you freedom to quit a job you hate, and pursue your dream career.
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No matter how hard I try, I can’t predict the future; and neither can you. And for that reason, saving up a safety net is a really good idea.
Think about it — without savings, how will you weather any financial storms? Without investments, how do you plan to make money when you’re too old to work? If you lose your job, will you be able to pay your bills?
Saving money is important, because it provides you with financial security. And the more you save, the more secure you will be.
Saving For Fun
Additionally, many people think you have to make a choice between saving money and having fun, but this is a poisonous mentality. In fact, fun is a critical part of personal finance, and it is essential for your financial and physical well-being.
Truthfully, you should always set a little money aside for enjoyment. And when you have savings, you can do this guilt-free, and without any worry that you are harming your financial future.
Once again, saving money gives you the freedom to do what you want to do. And sometimes that means having a little fun.
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It’s inevitable that throughout life, there will be some emergencies.
From a family emergency that requires you to fly across the country, to less emotional emergencies like a broken down car, having a decent amount of money saved up keeps you from adding financial stress to the pile.
Seriously, money is the last thing you need to be worrying about in an emergency. So do your future-self a favor and save up an emergency fund. Hopefully you’ll never need to use it, but if you do, you’ll be beyond grateful it’s there.
There’s nothing like financial stress to keep you up at night; or worse, wake you up in a cold sweat. (If you’ve ever experienced it, you know how unsettling that feeling can be.)
The good news is that there’s a great way to eliminate financial stress… just have more money.
You might be thinking, “Umm…duh!”, but it’s the truth. You see, everybody wants more money, yet very few people work hard to save it up. And, unless you win the lottery–which is beyond unlikely–the only way to have more money is to save it over time. It’s as simple as that.
Let me put it this way, would you rather pay your bills and have $20,000 in savings? Or, would you prefer to pay your bills and with $0 in savings?
I’m not a doctor, but I’m pretty sure the $20,000 option would be less stressful.
Do you know what happens when you save money wisely, and invest intelligently? Your money grows. And when your money grows, your opportunity to help others financially grows with it.
Consider this: if you give 10% of every dollar you earn to charity, or your local church, and you don’t have any savings or investments, your ability to give is limited by your annual salary. In contrast, if you save and invest your money, your ability to give will grow exponentially with compound interest.
Remember, money is just a tool you can use to accomplish your goals. And if your goal is to help others as much as possible, you need to be saving and investing your money consistently.
Can you imagine all the people you could help with the interest earned on $10 million? Just sayin…
I don’t think it’s a big secret that money problems are one of the leading causes of divorce. And if you’re married, you’ve probably experienced a money fight or two. And let me tell you, they are no fun.
But I can also tell you from experience that the more money you save, the less frequent those arguments occur.
In short, saving money is good for your marriage. Don’t believe me? Try it.
Leaving A Financial Legacy
If you died tomorrow, what kind of financial legacy would you be leaving behind? Would your story be one of debt and financial burden for your family? Or, would you leave a legacy of financial fortitude, wisdom and honor.
Your financial legacy is important to the people around you. Whether you’re 20 years old, or 90 years old, the way you handle your money will leave lasting effects—positive or negative–on your loved ones.
So, for goodness sake, get out of debt, trim your expenses, and place a priority on saving and investing your money. It’s one of the best ways to honor your family and friends.
You know what’s expensive? College. (Though, to be honest, elementary, middle and high school are pricey little endeavors these days as well)
I mean, my wife is pregnant with our first baby, and we’re already discussing 529 plans and funding our child’s college education.
And short of growing a money tree–you know, the kind dads always talk about–the only way we will be able to afford it, is if we start saving now.
Education is important–whether it’s your own, or your children’s. Ipso facto, saving money so you can pay for education is important.
From cars, to boats, to furniture, to big screen tvs, big purchases have a way of wiggling into the lives of the financially unprepared. Then, when the dust settles and the monthly payments kick in, that thing that cost so much money, transforms into an annoying roommate named, Buyer’s Remorse.
Big purchases are fun, and at times, necessary. You need a car so that you can drive to work. Living in a home without any furniture is uncomfortable at best. Watching football on a 12-inch tv with rabbit ears is not ideal.
But going into debt for a big purchase is worse. Rather, saving money so that you can pay for them outright is the way to go.
If you own a home, you’ve undoubtedly experienced the many expenses that come with it.
Whether they’re big expenses like kitchen remodels, or small expenses, like buying filters for your furnace, they add up. And while you might be able to cash flow the majority of them, it’s in your best interest to prepare for them in advance.
In fact, I recommend setting up a specific savings account just for your home expenses. That way, you don’t have to feel guilty pulling money from savings when you need to fix or update something.
Major Life Events
Life is full of events, but there are a few big ones that can get particularly expensive. For instance, the two that instantly come to mind are: newborn babies, and weddings.
So, it’s important to save for them.
Here’s a couple guidelines to get you started.
When that little pee stick reads positive, start a baby savings fund, and throw every last penny you can squeeze out of your budget into it. Then, when your daughter first starts dreaming about her wedding day, start saving for it. Weddings aren’t cheap.
Minimizing Financial Risk
The more money you have, the less risky your financial situation will become.
For instance, if you have $10,000 to your name, and you invest $6,000 to start your own business, you just risked 60% of your net worth. Whereas, if you save and invest until your net worth crests one-million dollars, then spend $60,000 to start a company, you only risked 6% of your net worth.
Plus, when you only invest 6% of your net worth, it’s pretty likely you will make up for that in interest, alone, over the next year.
Saving and investing your money minimizes your financial risk. Plain and simple.
If you want to build any kind of wealth, you are going to need to utilize the power of compound interest. But, if you spend all your money, and never learn to save, you will miss out on this valuable financial opportunity.
Additionally, the more time you waste, the less opportunity you have. Compound interest is extremely powerful, but you need to give it enough time to work it’s magic. You won’t just invest one day and see amazing results the next.
If you start saving now, it may be years before you start to see impressive results. But if you wait years to start saving, you won’t see any results at all.
Your future wealth called: it asked you to start saving.
One of the best parts of being an adult is the independence and freedom to do what you want, when you want. (Within the confines of the law, of course)
But the less you save, and the more debt you accrue, the less independence you will have. So, if you want to be financially independent and unshackled, you need to beef up your savings.
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The Importance of Saving Money – Final Thoughts
Saving money is important because it provides security, stress relief, and freedom. And while there are countless reasons to save, you just need to find a reason that resonates with you. Whether it’s helping others, improving your marital finances, leaving a positive financial legacy, or just having a little more fun, you owe it to yourself to prioritize saving.