With finances and credit so easily available, it is easy to get into the mindset of ‘I don’t need savings’. This, however, isn’t necessarily true. Yes, you may be able to afford the monthly repayments now but you never know when something may crop or your life can change unexpectedly.
There are many ways you can make changes to allow yourself to build up a nest egg. Some saving methods can be traditional or you can choose more unusual ways to build savings. But however, you decide to save, here are the reasons why you should build your savings up.
5 Reasons You Need To Start Saving Money
You Have Financial Independence
Not having to live paycheck to paycheck is a goal most people want, who really wants to be worrying about money and having the stress that is associated with making ends meet?
Being able to book that vacation, buy your new car without credit, be able to get back into education, or even start up your own business. These are all options that become available when you have the financial freedom of not having to worry about when your next paycheck is coming in.
You Are Able To Apply For A Mortgage
If you aspire to be able to go ahead and purchase a first or second home in the future, you will not be able to do so without a deposit. Along with having the money for a deposit you also need to be able to demonstrate to the bank that you have the financial capabilities to meet their ‘means testing’ affordability assessment.
If you are living a life with everything on finance these are deducted from their affordability assessment and will reduce the amount of mortgage you will be eligible for and also can impact your credit file and interest rates available.
Gets And Keeps You Out Of Debt
You will always find yourself in debt, or getting into debt, until you have savings. When the next big expenditure arises unless you have the money sat in your bank account, it will go on credit. Even if you have planned out your finances to cover big costs such as a holiday or a wedding, unexpected outgoings crop up. Cars break down, roofs leak, and of course, when you have adult children, you never know when they will need a helping hand too. Having savings protects you from future debt.
Makes Emergencies Less Stressful
Although you always hope that it won’t happen to you or a loved one, emergencies are unexpected. For the same reason, you took the course to learn more about CPR, building up savings takes away the added stresses and pressure when an emergency does arise. No matter what the type of emergency it is, you can almost guarantee it will be expensive.
Perhaps you need to take time off work to look after a loved one, hire at home care or a surgery puts you in the hospital for an extended period of time. They all result in some type of financial impact. But having savings in place allows you to be able to handle and deal with the emergency as you choose and see fit. Rather than having to stay on and work to keep the money coming in, you can take the time to focus on your family and your own health.
You Are Prepared For Funeral Expenses
It may be uncomfortable to think about but at our age, it is imperative. Should something happen to you, is there money set aside for your funeral arrangements? You would not want your children to have to stress about how they will carry out your last wishes. Savings will relieve a lot of stress at a very difficult time indeed.
I know with credit being so easily available, it is easy to forget about saving. But savings can make a huge difference in your financial stability. It is never too late to start and no contribution is too small. Consider your savings account just another bill you pay every month and you will be amazed at how it will grow.