Saving Money 101
As we learned in the Compound Interest section, it is important to stick to a steady disciplined strategy of continual savings. Why? Because you cannot predict the future. So, it is important to save money to prepare for unexpected expenses. It is also important to save money for financial security. The amount of money you save depends on your goals, income, and liabilities. But whatever your savings goals are, you need to do that before everything else, which includes eating and paying your cell phone bill. Keep reading to learn about the importance of savings and paying yourself first.
Importance of Saving Money?
Saving money is a basic financial rule. Despite its importance, most people do not save money regularly. Let’s take a look at four reasons why it’s important to save money:
- Emergency fund – From house repairs to loss of employment or an unexpected illness, things happen. That is why it is important to save money to prepare for emergencies and avoid increasing your debt.
- Retirement – If you want to retire, you’ll need to replace your income with savings. The earlier you save for retirement, the better.
- Education – Whether you’re going to school or paying for your children, it is important to set aside money for the rising costs of education.
- Hobbies – Everyone likes to have fun from time to time, so save money for your hobbies, e.g., vacation, sports, etc.
How to Save Money
Saving money is not as hard as you may think. You can save the following ways every month:
- Company 401(k) – easiest way to save regularly
- Roth or traditional IRA investing
- Brokerage account investments – fewer restrictions than retirement accounts
- Savings account – deposit a portion of your check into your savings account every pay period
Start Saving Today!
It’s never too late to start saving. If you haven’t started saving money, start today. Every penny counts. Use our robo-advisor investment tool to prepare for unexpected emergencies.