Like most people, do you also dream of spending the second half of your innings travelling to every country possible? Without having to worry about money or any responsibilities. Or maybe on a cruise enjoying the sunset on the bow of the ship, posing for the famous titanic pose with your spouse.
Recalling the time you both first met and how all these years of hustle have passed. And now you can finally retire and live for yourself. But what does it require doing all of this? The answer is very simple, MONEY! loads of money. And we can not undermine the importance of money.
But, is all of this going to happen overnight? Well, the answer is NO. Nothing of this is going to happen overnight (unless your business blows up). You’ll have to accumulate an immense amount of wealth to fulfill these dreams right from an early age. And the way to do so is SAVING MONEY. If it hasn’t occurred to you yet, why saving money is important? We have 11 reasons why you should start saving money from today and the benefits of saving money.
Table of Contents
#1 Earn compounded annual growth on your money saved
What is CAGR? CAGR stands for compounded annual growth rate. It is a term used by investors to measure the growth of their investments annually, during the life of their investments if profits were reinvested at the end of each year of investments’ span. In simpler terms, it tells the rate at which you have earned on your investments constantly during the term of your investments. It is not an actual rate but a representative rate for measuring growth.
Let us understand the power of compounding with a riddle. Suppose there is a garden where a lily is planted which doubles itself every day. On day one, there was just one lily. On day two the lily rose to two, on day three the lilies doubled and rose to 4. And on the 30th day the garden was half full with lilies, so how long will it take the lilies to acquire the full garden?
The answer is very simple, the lilies will acquire the full garden on the 31st day. This is the power of compounding. It took 30 days for the garden to be half full and just 1 additional day to fill another half. And the process requires PATIENCE and DISCIPLINE. You only get the benefit of compounding in a longer span. The golden rule that goes with it is THE EARLIER THE BETTER. To get the most benefit out of it, you need to start money-saving and investing TODAY. Because better late than never.
#2 You can live your lifestyle as you have dreamed of
The biggest mistake we do in our 20s is spending recklessly on branded clothes, shoes, partying at clubs, eating out at expensive restaurants etc. all of this to maintain a social status instead of saving for the future. And starting from your 20s is the best time to save money.
When we are in our 20s nobody expects us to have a lavish lifestyle but when you are in your 30s, people expect you to have a good lifestyle and to have it, one needs to have money. From living a debt-free life to owning a luxurious car in your 30s, savings are the way to go. You can monitor these easiest ways to save money.
#3 Save to get your Financial Freedom
Financial freedom is the notion to determine the status of a person. Being financially independent does not only mean earning for yourself but also having the freedom to decide where do you want to utilize those earnings. It could be taking a break for yourself, going on vacation with friends or family with no money problems, starting a company, investing in a company, etc.
And depending on a paycheck to fulfil all of this is certainly not what Financial freedom means. But having savings to cover all of this can sure shot make you feel financially independent and ‘rich.
#4 Saving money gives you an upper hand on contingencies
What would you do if someone in your family falls critically ill? Or the ceilings of your house start leaking and require major renovation, but your insurance plan refuses to cover the amount, or you lost your job. God forbid any of these unforeseen events ever happen to you, but financial risks are inevitable. And at a time like that money should form the ‘least of your concern’. That is when your savings shield you from these unforeseen financial risks.
So for the love of your loved ones, start saving your emergency fund today. An ideal emergency fund should be at least 6 to 10 times your monthly income.
#5 Buy your dream home with your savings
People dream of having a dream house and those who already have it dream of having an improved one. But how many of us work on being able to finally acquire it. Well, earning is one part of it but is it sufficient? No, merely earning a paycheck will not help, you need to have savings.
Now, some would say, what’s the point of saving money when we can take a loan. But the loan comes with a down payment, which has to be your money and can not be borrowed. The banks won’t lend without it. So again, your savings help you financing your mortgage, taking you a step further towards your dream home.
#6 To get you Peace of Mind
Nobody likes to live in fear, and financial stress can be havoc to your mental health. But is there any way to eradicate it? Well, having more money seems to be the only option here and as mentioned earlier, nothing of it going to happen overnight unless you win the jackpot, which seems highly unlikely.
So the only way remained to have more money is to save it over the years to have that mental peace. Because paying bills with sufficient savings is not as stressful as paying them with nil savings.
#7 Saving money makes you more disciplined
Savings are the best financial habit one can inculcate. It makes you disciplined and boosts your confidence. People who do not save for their future come to meet with crisis, eventually. And honestly, living on pay cheque-to-pay cheque can be very boring.
Hence, start today by keeping aside a fixed amount for savings from salary and investing them to accumulate wealth for you. And to remind you of the principle, the pain of discipline is sweeter than the pain of regret.
#8 You can serve as a good example
A quick question for you, would you rather want to be served as a good and impactful financial example or a negative one?
To guess it for you, you want to be the good one. By being financially sound and independent, you will be setting up a good example for your social circle, your friends, family, neighbours and your kids (if you have ones) as we are very well aware that kids learn from their home. You will act as their role model and they will learn the discipline of money-saving even before you learned it.
#9 Money Savings prepare you for big life events
Life can be very unpredictable. Neither do you nor do I know what will happen next. Therefore, it is always appreciated to be well prepared for upcoming big life events by money savings. It may be for your kids’ education, their marriage or your marriage, maybe a big career switch or financing your further education
All these big events are going to happen in everyone’s life and require one thing in common MONEY. You need to save money for all these upcoming events. Money can solve most of the problems, and it is not hidden from anyone that money is a secret ingredient to lead a happy married life…..
#10 Having a tranquil Retirement
This probably the most basic and emotional reason to save money. Eventually, we are all going to get hit by old age and not be active enough to work full-time or part-time. And honestly, even if we could work, none of us would be willing to work.
So as to live a cheerful life without working or depending on your children, start building your retirement corpus by saving money for retirement from today itself. And you wouldn’t have to be dependent on someone in your good old days.
#11 Save money for emergency funds
Emergency might come at anytime in one’s life so you should prepare yourself in advance. As said –
Repair Your roof while there is sun shine.
So take care of your’s and your family health and save money and invest a small amount in the best health insurance or invest in mutual funds where you might get compounded growth on your investment over time.
To conclude it for you, money-saving is important part of everyone’s life and can lead you towards a better life, not only financially but socially as well. But merely saving in a piggy bank is not going to harvest your wealth in this era. You need to put your money to make money by investing.
You can get the benefits of saving money together with investing. And you have better reasons for yourself, to save money. The earlier you start saving, the more money you save. And if it hadn’t come to you till yet. It’s okay, start by saving money TODAY because Better late than never.
Saving money provides you with a financial backbone in case of contingencies and enforces financial risk minimization and increases your risk tolerance capacity with an emergency fund. Moreover, money-saving can give a bigger scope to your investments, which can result in higher profits.
Saving money is important for students to cancel membership from the Federal Bank of Mom & Dad and finally become financially independent. It lets you create your own wealth and additional benefits are, you can be your boss and get everything as per your wish.