Everyone says to save your money. Financial planners, bloggers, your Grandma, and especially the Dave Ramsey followers. We all save for different reasons, but there are some serious benefits to saving money no matter who you are.
You might be thinking, BUT….
– I have enough to pay for everything, why should I save?
That is amazing! I am glad you are doing so well. Feeling like you should only live in the present moment is a philosophy I agree with for the most part, except your financial future. You need to be ready for when life throws you lemons. This could be a broken car or a job loss.
– I do not have enough money to save each month.
Opposite problem from the one above, you might feel strapped for cash every month. More often than not, this is because of no budget and no clear idea of where every dollar is going. Making savings automatic so you do not even see it is a great way to overcome this. (This is not speaking to those who are living in poverty and cannot rely on a paycheck)
– I am paying off debt now and not focusing on saving.
You are a rock star! Debt pay off is a long journey and can feel like enough money is being sucked out of your pocket…why save? Soon that debt will be gone and you will want to feel secure with a small buffer of cash. You also need to be aware of time. In some cases it can 10-12 years (or more) to pay off larger sums of debt. You should be saving for retirement at this time as well in order to take advantage of compounding interest.
– My credit card is my emergency fund.
Yikes! While you can use a credit card in an emergency, it is not recommended because you are creating a mountain of debt you have to pay off. Not to mention if you cannot pay it off in one month you will be paying interest, which is more than you originally borrowed. This is why having savings is a good idea.
I have used all of the above reasons in the past! Trust me, I get it.
The Reasons You Should Save Money
Increasing your savings should be a financial goal for everyone, regardless of what Grandma says. Here are a few reasons that saving money will benefit you.
1. You will be financially free sooner.
Not having to rely on the credit card or praying to the gods for money is a good thing. In fact, it is a great thing that frees up your finances and your thinking.
2. You will not have to worry about the next thing.
Most Americans are still living paycheck to paycheck. At some point disaster will strike in the form of a stolen phone or a large vet bill. Whatever it may be, having a savings to pay for this expense will be another way to relieve your stress.
3. You will be secure in your retirement
4. You can prepare for vacations
Hitting the beach or climbing a mountain might be on your bucket list of dreams. Having a savings can make this possible without being a. Financial stress. Going on vacation when you are not worried about money can be a huge relief and make it much easier
5. You can buy what you want
New car, downpayment on a house, or a new computer all cost a chunk of change. When you have a savings habit, these things can be made possible after a little bit of time stashing money away.
Less stress, more sanity is what we all want. Saving money can make this happen. You should start with the emergency fund, then look at retirement contributions, and lastly look at a larger emergency fund of 3-6 months. Somewhere in between start
The Savings Habit…there is an App for that
Remember, you do not need to have tons of money to start saving. It can be a small amount, as long as you start now. As I mentioned above, making savings a habit means automating it for most people (including myself!). Here are some easy ways to make savings a no brainer:
Qapitol, the app
An app for your phone that will automatically take a specified about, as low as $10 out of your checking every week and put it in savings. The best part is that if your account looks low they will not withdraw money, thus avoiding an overdraft fee. This is a great way to save more the fun things like trips or a new computer.
Synchrony, the online savings account
Synchrony is one of my favorite ways to save and store an emergency fund. They are simply an online only bank. They offer a high interest savings account that has its own debit card for access in case of an emergency. I have set up my Synchrony account to automatically withdraw $100 every month. This way my emergency fund just keeps building slowly over time.
Direct deductions for retirements
After getting your emergency savings and savings habits started you will want to get your retirement savings automated too. Many companies offer direct deductions from your paycheck straight to a retirement account. It could be the main one they offer or one you set up in addition to this like the 403b or 457b.
Direct deductions for savings
This is one of those things that is best for the person who should never see their savings touch the checking account. I do a direct deduction into a separate checking account for our mortgage payment, but the same process can be done with savings. Find out if you company has a form for this and have a separate account you can use. Make an auto deduction happen each month before your paycheck makes it to your main checking account.