Saving money is important for many reasons
If you still struggle to make saving money a priority, it might be a good idea to think about your own answer to the question, why is saving money important?
Of course, there are those obvious answers that generally apply to everyone, like preparing yourself for the future and being financially ready for unexpected costs. It’s just good, responsible, common sense.
However, although most people will say that they want to save money, most don’t end up doing it.
I think one reason many people don’t practice better financial behaviors like saving money is that they haven’t determined why it’s important to them personally. They haven’t defined those reasons that will motivate them to make the lifestyle changes needed to save money.
If you’re procrastinating with getting serious about your own savings account, maybe this is an exercise you need to complete. Take the time to define why saving money is important to you.
The benefits of saving money and improving your financial health are almost limitless. But, it’s those reasons that are personal to you that are the most important.
And, once you align your savings behavior with what you value, you’ll find that saving money has so many other benefits as well.
To give you some inspiration, here is a list of 50 reasons why saving money is important.
Want some great ideas to save money? Download this *free* 50 Tips to Save More Money checklist!
Why is saving money important? Here are 50 reasons to inspire you!
Need a little inspiration to start saving money? Check out these 50 ways saving money will improve your life. Pick those that align with your own values, and commit to saving more money.
1. Financial independence
When you’re financially independent, you don’t need to rely on others – such as banks, credit cards, family members, etc. – to meet your financial obligations.
You would have money in the bank to meet any financial needs that pop up and wouldn’t have to borrow money from anyone.
By prioritizing your savings, you have money you can access to keep you from depending on others financially.
2. Having an emergency fund for unanticipated expenses
Without a savings cushion in the bank, even a small unexpected expense can create a domino effect that leads to more debt, and derailing your household financial budget.
This is a good reason to build an emergency fund. This way, you can simply transfer a little money from savings to cover minor expenses that pop up.
By saving just a small portion of your current income every week, you can avoid having a minor emergency turn into a long-term debt.
3. Stop the paycheck-to-paycheck cycle
Living paycheck to paycheck means being one major crisis away from financial ruin. It’s stressful and can really suck the fun out of life. I know, because I was stuck in it for many years.
If you don’t want to live paycheck to paycheck, two of the most effective habits you can develop are living below your means and saving money consistently.
These two financial behaviors will give you the confidence you need to take charge of your current finances and future wealth.
4. Stay out of debt
Debt usually starts small but can slowly escalate into a huge problem that can hold you back from achieving your financial goals.
Financing your lifestyle with a credit card balance is no way to have financial security or freedom. Avoid the trappings of debt by being intentional with saving money.
5. Avoid paying credit card interest
Credit cards typically have the highest interest rates of all unsecured debt types. According to CreditCards.com, the average credit card interest rate as of April 2022 was 16.26%, its highest point in two years.
If you want to maximize your monthly income and be in control of your finances, get out of credit card debt as fast as you can.
Saving money is extremely important for avoiding credit card interest. The less interest you have to pay, the more money you’ll have for things that matter.
6. Pursue your passion
If you’ve ever been in a job you hate, then you know how frustrating this can be. Many people get stuck in employment situations where they can’t quit because they’re just making enough to pay the bills, or they can’t afford to make any less.
If you have money in savings, then you’re able to pursue a career that you’re passionate about, even if the pay is initially too low to cover your expenses. You can support yourself with money from savings while you’re increasing your skills and working your way up the ladder.
7. Build better financial behaviors
Something as small as deciding to start saving money can redirect your financial ship and put you on a path toward greater security. Saving just a few dollars every day will eventually lead to better budgeting, financial decision-making, and a much larger bank account.
By building a habit of saving money, you’ll start to see your bank account grow larger, be prepared for a financial emergency, and stop stressing about running out of money. Saving money will put you on a path towards financial success.
You can start small, like throwing your change in a jar at the end of the day, or canceling a membership you don’t use. Simple steps like these will strengthen your mindset around saving money and create a habit that becomes second nature.
8. Reduce stress
Your savings balance doesn’t just affect your wallet, it also affects your health – mental, physical, and emotional. It’s just as much an expression of self-care as eating healthy or exercising.
If you don’t have enough in your account to support your monthly expenses then you can develop chronic stress. This will lead to overthinking simple decisions like buying lunch or making small impulsive purchases at Target. Chronic stress can also lead to physical ailments like heart disease and a weak immune system.
When you prioritize your savings and have money in the bank, you can reduce your overall stress level, think more clearly, and focus on more productive things.
9. Do fun things
It’s important to save money to get out of debt and fund your retirement, but you should also use it to have some fun in your life!
Put some fun money aside so you have extra cash to spend on the things that bring joy to your life. This will keep you motivated to keep working toward your financial goals.
10. Live a healthy life
There’s no doubt that saving money is an important habit that will help you get ahead in life. In addition, being able to save money will also set you up to be healthier both physically and mentally.
If you’re not able to save effectively then it will be very difficult for you to support the lifestyle that you want. Saving up for a nice house and reliable vehicle brings stability to your life, which supports your overall health.
11. Have financial security
Knowing there’s cash in the bank to cover whatever life brings your way can give you a strong sense of security.
Of course, you can’t predict the future and anything can happen. But, when you make decisions out of a sense of security, then you can respond in wisdom instead of reacting in fear.
It’s important to save money to strengthen your financial confidence. Having a money mindset that’s rooted in stability will guide you toward better financial decisions.
12. Protect your future wealth
Whether you’re on a tight budget or have a cool mill in the bank, you’re subject to risk. Thankfully, you can transfer many financial risks to insurance companies.
When you pay insurance premiums, the insurance company agrees to take on financial risks and protect you in the case of a financial crisis.
From a damaged roof to emergency surgery to in-home health care costs – a good insurance policy will protect you from financial ruin.
Without insurance to protect you against the risks that life will hand you, you jeopardize all of the hard work you put into building a solid retirement savings plan.
Saving money to afford the right insurance is *critical* so protect not just your financial future – but your partner’s and children’s as well.
13. Be a good Samaritan
It truly is better to give than to receive, and the more savings you have in the bank, the more you can be generous with others. Finding opportunities to give your money away is how Dave Ramsey defines “financial peace”.
A meaningful reason to save money is to be prepared to give when you encounter a person in need. Maybe you want to help someone whose car broke down on the side of the road. Or perhaps you want to treat someone who is down and out with a hot, filling meal.
These moments not only benefit the receiver but add joy and purpose to your life as well.
14. Help family & friends in tough financial situations
I think the most impactful purpose of money is to help others. But, if you barely have enough to cover your own living expenses, you won’t have any left to be generous.
It’s important to care for your spouse and kids first. But, being able to help out relatives with a family emergency, or close friends with a financial burden, can be a very meaningful reason to save money.
Be wise with your money and build your savings. Someday, you may be able to bless others with much-needed financial support.
15. Support your kids and grandkids
With a significant increase in the average cost of living and student loan debt, the Millennial generation has struggled to save money for their future. This entire age group is now plagued with financial problems that Baby Boomers never had to deal with.
Then, there’s Gen Z, which is their children. Recent surveys show this age group has already experienced significant setbacks created by the coronavirus pandemic.
If you’re reading this and you’re in your fifties, I’m talking about your kids and grandkids.
You can help them in two ways:
- Save enough money so they don’t have the burden of supporting you in your old age.
- Save enough money so you can give them a financial boost if they need it.
Either way, save your money so you can support them as they overcome some major barriers to become financially independent.
16. Give more to your church
If you tithe to your church, then you probably know that tithe means a tenth. As Christians, my husband and I give 10% of our income to our church, as one way of putting God first and trusting Him to provide.
But, did you know that this is the *minimum* amount God wants you to give? When He has blessed you with abundance, He wants you to give of your wealth, and not just from your wealth.
Giving over and above your tithe is making an offering to God. Then, you trust God (and your church leaders) to use that money in a way that will glorify Him.
When you make wise financial decisions that allow you to build savings, you have more to offer. The wealth you build can be used to bless missionaries, ministries, and ministers.
17. Support causes that are important to you
When you’re pinching pennies, the world seems to get a lot smaller. All you can think about is how you’ll get food on the table, fix your car, pay the utility bills, and get rent covered. There’s no room to consider other’s needs.
Breaking out of the paycheck-to-paycheck cycle and building wealth and savings can free you to think about how you can help improve the world around you.
What causes are important to you? How do you want to make a difference in the world?
Here are a few ideas:
- Support disabled veterans
- Fund a school improvement project
- Give money to cancer research
- Donate to your local children’s hospital
- Buy food & personal care items for a homeless shelter
When you save money, you have the freedom to support the causes that are meaningful to you.
18. Protect relationships
Money has the capacity to put stress on your relationships if you don’t have savings. If you get into a financial bind, you may be forced to go to a family member or friend to borrow some cash. This can create friction and put your loved one in an uncomfortable position.
Living on a tight budget can also add tension to a marriage, especially when you and your partner have money fights over how to spend what little you have. Problems with marital finances are one of the main reasons two people divorce.
Protect your relationships by building financial security with savings.
19. Set a good example
When you have the wisdom and discipline to save money and pay cash for everything you buy, your kids will notice.
You set a good example and teach your kids about money when you make savings a priority. That one lesson could serve them well their whole lives.
20. Create a lasting financial legacy
How do you want your loved ones to remember you when you’re gone? How do you want to take care of them even when you’re no longer here?
How you handle your finances today will either bless or burden your loved ones later. You have the control to create the lasting legacy you want for your family.
It’s important to save money today to build a financial legacy that will support your family for generations to come.
21. Help your kids with the cost of a college education
Paying for your kids’ college education is not an all-or-nothing decision. Even if you know you won’t be able to pay for a full ride, you can still use a little money from savings to help with books, supplies, housing, etc.
It’s up to you to decide how much you want to financially support your kids through college. But the important thing is to put your financial future first. Just make sure you’re on track to a fully-funded retirement, and that helping out with their education won’t put your financial security in jeopardy.
If you can swing it, your savings can help your kids create a brighter future.
22. Pay cash for cars
Vehicles can lose 60% of their original value within the first 5 years. If you finance the cost, you’ll sink even more money into it that you’ll never get back.
Save up and pay cash for a gently used, slightly older model that’s reliable. Paying cash for cars will minimize your investment in a depreciating asset and allow you to save money for other major purchases when you need them.
23. Afford nice things
When you have just enough money to get buy, it’s hard to pay more for quality. I can’t tell you how many times I chose to buy cheap furniture, cheap shoes, and cheap bedding (among other cheap things) because I didn’t have the money to afford the good stuff.
Of course, cheap stuff doesn’t last long and I would inevitably have to replace those things faster than if I had just paid more for quality to begin with.
Save your money so you can afford *nice* things. You’ll value them more, they’ll last longer, and you’ll probably end up spending less money in the end.
24. Put a down payment on a house
If you’re ready to invest in your own home, you’ll need to come up with a significant cash down payment. This may take a long time to accomplish, so you’ll need to be very disciplined when it comes to saving money.
However, once you own a house (rather than rent), you’ll likely have the largest asset you’ll ever own. Your home will have the capacity to increase in value, reduce your taxes, and create lasting memories for your family. It’s probably the most important purchase you’ll ever make.
So, saving up for a down payment is very important if you want to experience all the benefits of homeownership. It will be a huge undertaking if you currently have no savings, but with consistency and commitment, you can save up enough to buy your own house.
25. Pay off your mortgage
Dave Ramsey highly recommends having your mortgage paid off by the time you retire. This may sound impossible if you’re a late saver, but don’t let that discourage you. Even paying a little over your regular monthly payment can result in huge savings over the life of a 30-year loan.
For example, on a 30-year, $200k mortgage at 4.1% interest, you could save roughly $28,000 in interest costs just by adding an extra $100 to your monthly payment. This would get your mortgage paid off 5 years early!
Saving money to pay off your mortgage will save you thousands on the loan, and give you more years as a mortgage-free homeowner.
26. Meaningful life events
Major life events can be exciting, upsetting, or overwhelming – and many times financially stressful. They are significant turning points that you want to be financially prepared for.
Start saving money now so you’ll be prepared for life’s changes. Start a baby savings fund or wedding fund, in anticipation of future events that can put a strain on your personal finances.
Just because you’re not in the middle of a life-changing circumstance doesn’t mean you shouldn’t plan for it now. Being intentional with savings when life is stable will reduce stress when those inevitable changes arise.
27. Increase your liquid net worth
Your liquid net worth measures the assets you own that can be quickly converted into cash. These could be stocks, bonds, certificates of deposit, mutual funds, etc. Assets such as real estate, collectibles, and retirement funds are not typically considered liquid assets.
A higher liquid net worth means you’re more prepared to handle financial emergencies without going into debt. It’s essentially a reflection of your financial security.
Because cash is the most liquid asset you can have, saving money is one of the best ways to increase your liquid net worth. It’s important to save money so you can strengthen your financial security and be ready for life’s unforeseen circumstances.
28. Take advantage of calculated risks
Saving money can open up opportunities to take educated risks when they’re presented. For example, getting in on the ground floor of a brand new business, or purchasing stock through an IPO (Initial Public Offering) of a promising company.
Or perhaps you want to start your own business. If you have a healthy savings fund, you can afford to take the risk of quitting your job or reducing your hours to get it started.
Having savings set aside gives you more choices when life hands you favorable investment opportunities. You minimize the risk you take while benefiting from the rewards.
29. Take advantage of fortuitous opportunities
Wouldn’t it be awesome if your friend gave you two free tickets to see a Broadway play next month?
All you have to do is buy the plane ticket.
I know, I know. If you didn’t have the extra money in savings you’d probably just charge it.
But, why not save now so you’re ready when these amazing opportunities pop up?
30. Maximize compound interest
If you’re behind on retirement savings, you’ll need to maximize the power of compound interest to have enough money to retire. This means saving up as much as you can, as fast as you can, in a fund that gives you a good average rate of return.
Compound interest can do magic on your humble contributions, but it needs time to really show its impressive abilities.
That’s why it’s important to start saving now. Don’t wait another day. Set up a direct deposit into a retirement fund so you can let your money and compound interest start working together to secure your financial future.
31. Retire on time
Did you read that last paragraph? Saving money today has a very real impact on your future. Investments need time to grow so they’re ready to support you in retirement.
Do you want to retire before you’re 80? Start saving money now. Make the lifestyle adjustments you need to make so you can free up more cash for retirement savings. Get a second job, downsize your home, leave the college tuition to the kids.
If you’re a late saver, it’s time to get focused and get serious so you don’t have to keep working if you don’t want to. It’s never too late to start saving for your retirement, but the best time to do it is now.
32. Be prepared for irregular expenses
Irregular expenses are those that are expected but tend to come at the most inconvenient times. Right?
Actually, any time I have to pay for a bill that I expected but didn’t save for is pretty inconvenient.
Annual expenses like insurance premiums, car registrations, federal and state taxes, and my favorite … Christmas shopping.
These costs don’t go away, but they’re easy to ignore because they don’t happen very often. If you set up a dedicated savings account (commonly referred to as a sinking fund), then you’ll be prepared when they pop up and surprise you (like they do every year).
That way, you can actually save your emergency fund for emergencies.
33. Have more options
It’s just a fact of life. More money opens up more options.
You don’t have to feel stuck in the circumstances you’re in when you have the cash to fund a better alternative.
Maybe you’re thinking that this doesn’t really apply to you. You’re content with your job, your home, your vehicles, and your lifestyle. You don’t care about having more choices.
But, what if you receive a life-threatening diagnosis and your insurance only covers certain treatments? Or your son decides to uproot his family (with all your grandkids) and move across the country?
This is when you’ll be glad you built the habit of saving money. Having cash set aside will give you the ability to choose your next step, instead of having to settle for what is.
34. Have more freedom
Being disciplined and intentional with your savings will give you more freedom in life. When you delay gratification today in order to save for a greater purpose later on, you’re building a life of freedom for your future self.
Freedom from debt, from stress and anxiety, from a job that sucks the life out of you.
Freedom to choose where to live, when to retire, and what to do with your life.
Money gives you the freedom to live on your own terms, so it’s important to save it if you want more flexibility in your life.
35. Support yourself until you die
Nobody knows when their time is up, so it’s a little tricky to know if you’ll have enough savings to last your retirement years. If you don’t want to run out of money and rely on your kids or the government, it’s best to err on the side of living longer.
Having multiple streams of income before and after you retire will minimize your risk of running out and increase your ability to save more.
Do what you can to overprepare with more savings than you think you’ll need. You don’t want to find yourself in an unfortunate situation where you’re really old, and really broke.
36. Won’t have to rely on uncertain income sources
Although it seems unlikely that Social Security will go under before you see any of the benefits, it is projected to exhaust its surplus funds by 2035. After that, if no changes are made, only 75% of the benefits will be covered.
With such uncertainty, who knows if you can rely on this income when you really need it?
Focus on what you can control: your income, your expenses, and your savings. Save what you can now so government benefits are just icing on the cake.
37. Be able to negotiate a lower purchase price
When you have cash in hand, you have the leveraging power to negotiate. Getting paid in full with 0% risk is a seller’s ideal transaction, so they are often willing to make a better deal for the buyer who pays in cash.
Having cash savings not only gives you financial stability, freedom, and control over your money – it also gives you more power as a buyer.
38. In case of job loss or injury
This one might hit close to home for you, especially after the recent worldwide pandemic that resulted in many people losing their jobs.
Both my husband and I were furloughed from our “secure” jobs and had to apply for unemployment. It was a scary time, but we were able to stay afloat even with reduced and inconsistent income for over a year.
I think we can agree that job security can disappear overnight. Having a good cushion of savings in the bank can be the difference between riding out a storm and drowning.
Whether you lose your job or get injured and can’t work, being diligent with saving money will give you the security you need in such uncertain times.
39. Be prepared for a medical emergency
You never know what life has for you just around the corner. You may get injured in a car accident. You may slip down the stairs and break your ankle. You may get diagnosed with a life-altering disease.
Be prepared. Put money in savings. Take care of your future self.
40. Put money in a Health Savings Account
A Health Savings Account (HSA) is like an emergency fund for medical expenses. The contributions you make are pre-taxed and can be used to pay for qualified medical costs – tax-free – forever. The money in your HSA never expires and remains yours regardless of changes in insurance, enrollment cycles, or employment.
The HSA is a great place to build savings because of its tax advantages, benefits, and convenience. You can even invest your contributions once you reach a certain balance.
Adding savings to an HSA today will improve your financial circumstances in retirement. Because the money always remains yours, you can use your savings to pay for medical costs throughout your life.
41. Be prepared for life’s uncertainties
I’ve already mentioned a few of life’s curveballs, but there’s always more, right?
Like, when your parent’s retirement fund gets low and they don’t have enough to cover their expenses.
Or, when your air conditioner unit decides to give up in the middle of summer.
Or, when your trusty car doesn’t want to work right anymore.
Or, when your taxes go up, your premiums jump, or your utility bills keep getting higher.
Seriously … I could go on. But, you get the picture.
Sometimes it will be a real emergency, other times it won’t. But, when you have a savings buffer in the bank, you don’t need to distinguish between the two. A surprise expense just becomes an inconvenient blip on the screen, without all the worry and drama.
42. Be a world-traveler
Okay, so this may not apply to you. Maybe you’re content to stay local.
But … wouldn’t it be nice to have the choice to see other parts of the world if it ever tickled your fancy?
After you retire, racking up credit card debt to live out some lifelong dreams is not a wise strategy. That’s why it’s important to save money now for adventures that may await you in the future.
Set money aside to create your own traveling experiences. You’ll have great stories to tell, treasured memories to share, and an expanded understanding of the world we live in.
43. Maintain your valuable assets
When you pay thousands of dollars for an asset like a new vehicle or a house, you plan on it lasting for many years. After all, you want to get your money’s worth, right?
Inevitably, there will be extra costs along the way. Your house will need a new coat of paint, and your car will definitely need new tires on occasion.
Just because you already paid for the asset, doesn’t mean there won’t be future expenses to maintain it. And, the more consistent you are with maintenance, the longer that asset will last.
If you want the things you value to serve you for many years, make it a priority to save money for their upkeep.
Who knows? You may be living in that house for the next 25 years, or want to pass on your old truck to your teenager. Having the money to take care of your assets will ensure they last a long time.
44. Make improvements to your home
Besides just regular maintenance on your home, there will be times when you want to make some improvements to increase its value. Realtors often recommend upgrading outdated kitchens and bathrooms to get the highest sale price.
Many people take out a home equity loan to cover these costs, but that will only increase the total cost over time, as well as decrease your profit when you sell.
If there are improvements you’d like to make, create a home improvement fund and start setting savings aside so you can pay cash. You’ll have more options when you’re ready, you’ll minimize the overall cost, and you’ll come out ahead when you sell.
45. Achieve your long-term goals
Whatever your long-term goals may be, saving money now is critical to achieving them on time.
The sooner you start, the greater the chances that you’ll be successful in reaching them.
I once read that people tend to overestimate what they can accomplish in a year, but underestimate what they can achieve in 5 years.
Let your imagination run loose by creating a big, audacious vision for your future. Set your biggest, out-of-reach goals for 5 to 10 years from now. Then, start taking tiny steps by saving a little money every week.
Your future will be here before you know it. Save your money now so you can live out your biggest dreams when it gets here.
46. Achieve your short-term goals
Having financial goals is important to create the quality of life you want. But, if your shortsighted spending derails your long-term objectives, you’ll never make any progress.
Long-term objectives are made up of short-term goals. The latter gets you closer to the former. If you don’t have a plan for today, this week, or this month, then you’re only pushing your dreams further into the future.
Break down your long-term financial goals into smaller steps. Find creative ways to save more money today so you can maximize your efforts as you make progress.
Don’t let temporary distractions derail your dreams. Don’t wait for better circumstances to build savings and wealth. Start saving today so you can make quick wins with short-term goals that inspire you to stay the course.
47. Take time off
Sometimes you just need to take a break. In times of heightened stress or exhaustion, it’s critical to allow yourself time to rest and unplug.
Losing a loved one, going through a messy divorce, or dealing with a troubled teen are valid reasons to step back from work and focus on what’s more important.
But, if your job doesn’t pay for time off, you may feel stuck.
Having savings set aside can give you the freedom to have this option when you need it. Then, when you go back to work, you’ll be able to give your best.
48. Be a good steward
This is a term not often found in everyday language, but it’s an important concept in the bible.
The word “steward” means a person who manages another’s property or financial affairs. As a Christian, I believe that everything I have is a gift from God, and He expects me to be responsible with it. This includes my children, my home, my job, and yes … even my money.
Part of good financial stewardship is not falling into excessive debt, being faithful with giving, and avoiding reckless spending. All of these are connected to saving money.
When you save money, you’re practicing delayed gratification and self-control. You’re making future priorities more important than daily whims. You’re being a wise manager of the money God’s given you.
If you want to be a good steward of the blessings in your life, be a saver.
49. Complete your bucket list
It’s really starting to sink in that I’m going to be an empty-nester in a few short years. For the past two decades, most of my time and energy have been consumed with my role as a mom. But, our youngest is graduating high school in a couple of years and leaving for college.
I know I’m going to struggle when this season changes. It will take some time to adjust, but one way I can make it more enjoyable is by working on my bucket list.
Well, first I have to make a bucket list.
When our last chick is out of the nest, I don’t want to be stuck at home, with me and my husband staring at each other, wondering what do we do now?
I want to make the most of it. I want to have new experiences, visit new places, learn new skills. I want to build new friendships and invest more in old ones.
Most of this will require some degree of financial outlay, while we’re also ramping up our retirement contributions.
Saving money now is important so I can check off as many items on my bucket list before I get too old to get out of my La-Z-Boy.
What about you? Do you have a bucket list?
If you don’t, start one today. Add to it over time. And let it inspire you to start saving more money.
50. Live the good life
What can I say? Saving money can open up more doors than you can possibly imagine. This important financial habit can help you create the life you really want.
The *good* life.
Get in the habit of saving money so you can build the life you dream of. Whether you want to start your own business, retire early, or travel around the world, it all comes down to your ability to save money.
Don’t forget to grab your free 50 Tips to Save More Money checklist!
Where should I keep my savings?
There are several options where you can keep your savings, and the one you choose should depend on your financial goals.
Some choices are more suited for long-term objectives, because your money will be inaccessible for a period of time. If you want your savings to be available at any time, pick one of the options on the left.
|Short-term goals||Long-term goals|
|Checking / Savings account||Certificates of deposit|
|High-yield savings account||401(k) or IRA|
|Money Market Fund||Treasury Bills|
If your goal is less than one or two years away, your best bet is to keep your savings in a checking or savings account, online savings account, high-yield savings account, certificate of deposit or money market account. (Putting your savings in a piggy bank or home safe may be convenient, but the risk of loss is greater, and you won’t get any return on your money!)
How do I create a savings plan?
Having a savings plan in place will help you stay on track with your financial goals. Here are 5 steps to create your own savings plan:
- Create a monthly household budget
- Set some financial goals
- Add your monthly savings goal as a budget category
- Open a separate savings account
- Set up automated transfers into your savings account
How much should I be saving?
How much you need to be saving will depend on your current savings pool and future financial goals.
Here is a simple formula to determine how much you should be saving every month:
(Savings goal – Current savings) ÷ # of months to save = Monthly savings
For example, if you want to save $3,000 in 6 months, and you already have $500 in savings, then you would need to save this much every month to reach your goal on time:
($3,000 – $600) ÷ 6 months = $400/month
How do I save money on a tight budget?
If money is tight, then it might seem impossible to find any extra to save. However, if you track your spending closely, you will likely find opportunities to cut expenses and free up more for saving.
Here are 5 things you can do to save money on a tight budget:
- Minimize unnecessary spending
- Reduce insurance premiums
- Refinance credit card debt and mortgage loan
- Stop eating out
- Start a side gig to make more money
By reducing monthly expenses and making a little extra money on the side, you’ll free up more income to save.
What are the best ways to save money?
The best way to save money is the method that works for you! With that said, the top 3 ways that I have found most effective are:
- Get out of credit card debt
- Stick to a budget
- Have specific financial goals
- Stop impulsive spending
- Pay yourself first with automated savings
What are the 3 basic reasons for saving money?
As you have learned in this post, there are many great reasons to start saving money. But, some have more weight than others. If you don’t set money aside for these 3 circumstances, you could find yourself in serious financial hardship:
- Emergency expenses
- Debt payoff
Focus on saving for these 3 basic reasons, and you’ll be well on your way to financial freedom.
In summary: why saving money is important
So, have I convinced you of why saving money is important for your future?
If not, I encourage you to go back to the top and read this post again. Find a reason to save that resonates with your heart and motivates you to prioritize your future.
Write down some goals, figure out your values, and start aligning your saving habits with your priorities.
When you get serious about saving, then you’re on the path to achieving your wildest dreams.
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- 9 Powerful Benefits of Setting Financial Goals