8 February 2021
We need to find the methods and tools that best suit our financial approach and lifestyle. However, there is one habit that every individual, no matter their circumstances, needs to practise – saving.
Saving is the bedrock of financial stability. As our confidence grows in following a budget, we can create space to build our savings. (Pro tip: The best time to put money aside is just after you’ve been paid.)
First and foremost, saving helps to protect us in the event of a financial emergency. There will inevitably be emergencies throughout life, whether expensive medical bills, unexpected car repairs, or a sudden job loss. When these events occur, money is the last thing that we want to be worrying about, and we will be thankful for any ‘under-the-mattress’ reserves that we have saved up. In fact, your budget should include an emergency fund, with monthly contributions, for just such a scenario.
Additionally, saving money can help us prepare for large purchases. Big-ticket items are fun and, at times, necessary. These kinds of investments can be great motivators when encouraging us to save. From once-in-a-lifetime holidays and big screen TVs to new vehicles and houses. Saving also allows us to mitigate some of the extra costs that would appear in the form of interest and fees if we were to purchase purely on credit.
Another reason to save is for that formidable financial mojo known as compound interest. If you are always spending your money, then you will miss out on this valuable financial opportunity. Compound interest is a potent wealth-building tool, but you need to give it enough time to work its magic.
Saving even goes beyond personal enterprise. How we handle our finances will have lasting effects – positive or negative – on our friends and family. Our wealth creates a legacy. Not only in a physical sense, but in our attitude.
Having a comfortable level of savings can reduce stress and provide us with commercial confidence – eventually leading to financial freedom and control.
We all want to send our children and grandchildren to university or give them opportunities and stability for a future of their choosing, but let’s also impart them with financial competence and prudent economic know-how.
If you are looking for the right financial vehicles to carry your savings into the future, chat with us today.