Certain things that we do regularly can become habits. Habits can be good or bad and obviously we should try and stay away from bad habits while inculcating and developing good habits. Saving money is one such good habit and therefore we should give it the importance that it deserves. If you are keen on securing your future, this is why it is important to learn how to save money.
Like all good things in life, getting started is perhaps the toughest task. Once we are able to do it, it becomes a good habit and our subconscious brain then takes over. The same is the case with saving also. However, to get started on the right note you must first understand why it is important to start saving money. Once you have this basic knowledge in place, you will be able to find out avenues that could help in saving a part of your regular income. It will help you to secure your future and also that of your family, especially when you are on the wrong side of fifty.
Reasons to Save Money
- Saving money will come in handy during emergencies. According to studies, 40% of Americans do not have even $400 as extra reserves in case of emergencies. This is dangerous and therefore saving a part of your income regularly could avoid such a situation.
- Saving helps your retirement. Post sixty even if your mind may be willing to work, body may not cooperate. In such situations, if you have cultivated a good saving habit it certainly will help you when you may no longer be as productive as you were in your active days and years.
- It could help you to accumulate assets. You may have dreams to buy a good home or other such movable and immovable assets. The realization of the dream will become easier if you have enough money to fund the initial payment for purchase of homes or other such assets.
- Save for vacations and unforeseen expenses. Who does not want to take vacations with family members? Would it not be a good idea to go for vacations with your saved money instead of borrowing money at high interest rates?
Hence, it is quite obvious that there are many reasons to save money. Let us learn a few tricks that could help you to develop this good habit.
- Keep a record of expenses. You cannot seriously get into saving unless you know how much you are spending. You must therefore keep an account of all the expenses that you make. You should be specific about it and would do well if the expenses can be recorded in an excel sheet under different heads.
- Keeping a record will help you to get into the savings mode. You will learn to budget your expenses and cut down on expenses that are wasteful and unnecessary.
- Keep the long term and short term savings in mind. If you are around 25 years, then you should have an intelligent mix of both short term and long term savings. For those beyond 50, a combination of medium term savings and long term savings would be a prudent approach.
The Final Word
In fine, saving money is as important as learning new skills and finding out ways and means to further your career.