The 5 Most Important Reasons to Save Money

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In one of our recent blogs we talked about how to make a saving money easier. In today’s blog we’re going to look at 5 reasons that saving money is so important. The fact is, having enough to pay for everything you need, while a good thing, doesn’t mean that you shouldn’t be putting aside some money every month. There are a lot of excellent, and vital, reasons that you should be saving money, especially if you aren’t in debt right now.

Reason 1. Saving up for a down payment on a new home. Simply put, if you have a large down payment that you can put on your home, your negotiating power increases substantially. You can get better interest rates, possibly get a bigger home and, over time, will pay a lot less in interest on your smaller mortgage.

Reason 2. Creating an emergency fund. We’ve talked about this in several blogs before but it’s well worth repeating. Having an emergency fund set aside in a money market or checking account, one that can cover from 6 to 12 months’ worth of expenses, could mean the difference between financial stability and bankruptcy. If you get hurt, lose your job or for whatever reason don’t have any income coming in, having an emergency fund set aside could literally save you from destitution.

Reason 3. Saving for a family vacation. Spending time with your spouse and children can create powerful, strong and lasting bonds as well as wonderful memories. A trip to Europe or a cruise around the Caribbean is something that you and your family will remember for many years. Frankly, you also don’t want to pay for your vacation with credit because, in two or three years’ time, the resentment you feel because you’re still paying it off might negate any fond memories you have.

Reason 4. Saving for an automobile. Paying for a car, whether new or used, with cash will give you a lot more purchasing power. Having cash in hand in an automobile dealership gives you negotiating power that simply can’t be ignored. Also, not having a car payment every month will allow you to do much more with your weekly paycheck.

Reason 5. Saving for your eventual retirement. We’ve talked about this quite a few times in the past as well, because saving for retirement is extremely important. The earlier you start the better as compound interest will greatly add to your “nest egg” once you hit your golden years. Most experts believe that you should put between 10 and 15% of your gross income aside for retirement and, if you have a 401(k) with an employer matching program, match those funds to the maximum every year. Outside of a 401k you can and should open a brokerage account so you can diversify. Regardless of what you invest in, the more you put away early in life will be that much better for when you retire.

We hope you agree that those are five excellent reasons to save. There are others, to be sure, but we believe these are the most important. Saving money might not always be easy but, over a lifetime, could mean a huge difference in how you live your life and how you spend your time during retirement.

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