Research by Northwestern Mutual shows that 20% of Americans don’t have retirement savings, while 45% aren’t prepared if their retirement can’t cover their expenses. It’s not disputed that saving money is crucial, but most people still ignore this sound advice. Even with a secure job that covers all your bills, financial planners say you need to put aside some money each month. Different people have different reasons to save, but having clear goals makes the journey easier. These reasons will get you off the couch and into the saving train.
- You can’t plan for emergencies
Can you cover at least six months of your monthly expenses if things went wrong? If your answer is no, you must start saving immediately. It’s impossible to plan for emergencies, but when they do happen, you want to have a safety net before you can get back on your feet. Most people don’t have $400 available to cater for emergencies. An emergency could be a car repair or a work injury that sets you back thousands of dollars in medical expenses and care. As your lawyers work on getting you a favorable settlement, you need to have some money aside for medication, bills, and everyday expenses. As you nurse your injuries, you may not go to work, and may even get laid off if the injury is severe. Be prepared by having an emergency fund.
- Saving will give you freedom
Freedom has nothing to do with money, but with the flexibility of choice. As you start, you may not be saving for anything in particular, but things could change in the future. For instance, you may want a new car or a home. With money, you can do what you want without being stressed or feeling stuck because you rely too much on your job. Save with your financial goals in mind, like taking time off to travel and see the world while covering your regular expenses. It could also be for your child’s education. The idea is not to have sleepless nights because you can’t afford something you need.
- To have money working for you
When starting, you work so you can earn money and pay your bills. But with the right saving strategy, you can invest your money and build a portfolio, so your money works for you. Over time, you can work less and still maintain your living standards because of sound investments. There are risks involved when investing, but if you have enough savings, you have leeway and peace of mind to research and choose the best option for yourself. Savings don’t look like much when you start, but within ten years of consistent, disciplined savings, you could retire and live a full stress-free life from what you stashed away.
Having a secure job is the first step in saving. You must have a source of income from where you draw your savings from, so don’t take it for granted. Make a savings plan, research investments, safeguard yourself from risk, and let money work for you.