Saving money is one of the best ways of taking charge of your finances no matter what the economy is like. Accumulating a healthy savings account is also good for your mental health.
After all, who wants to feel the stress of knowing they are just one or two paychecks away from disaster financially due to lack of money when an emergency occurs? A sick pet, a sick child, a car breaking down, disability or job loss are all kinds of financial emergencies.
You may have wondered why financial planners and even the media have always seemed to emphasize saving money. If you have enough money to pay for all bare necessities, why do you need to worry about saving extra money each month?
A Convenient Cushion
Savings cushions you from the uncertainties of life and increases your feelings of peace of mind and security. Once you establish an adequate fund for emergencies, this gives you seed money for investments that yield higher gains including mutual funds, bonds, and stocks.
A lot of discipline is required by saving money. However, it is not a difficult habit to develop, as long as you are fiercely determined. There are great benefits from developing the habit of saving money when you develop it as a habit.
Rising Health Costs
Another reason to increase your fund for emergencies is the continuous rise in health costs. Even with Medicare or insurance, you never know what health conditions come up that insurance may or may not fully cover.
It is important to set aside an emergency fund to cover expenses you don’t expect. This could be an emergency appendectomy, unexpected car repair or even dental issues that suddenly pop up out of nowhere. If you’ve socked away a good amount of money to tide you over for unexpected expenses that sometimes come up.
Setting Your Own Saving Goals
Different people save for different reasons. There are many reasons to save money. It is easier to save money when you have a clear purpose and a clear goal for saving money.
If you are just beginning, put aside a fraction of your monthly income as a start. If you are trying to get out of debt, save whatever you can to total a year’s worth of income. Finally, if you live with just one income or are single, you will want a larger emergency fund.
A Sense Of Control
When you save money, this generates a feeling of being able to control the events of your life. Most people like having a feeling of control and are thus more resilient, cope better, and are often happier in times of stress than those that are not.
On the flip side of the coin, people are not as happy in circumstances when they feel they have no control. Setting goals of saving and achieving them also gives you a great sense of achievement.
Stepping It Up
How do you ramp up your current savings level? Rather than saving just for the sake of saving, create a goal, and go for it! Ask your company or bank if they have an automatic savings feature so a percentage of every paycheck goes into a separate account for savings and you can watch your savings grow.