Three Reasons Why You Should Save Money

The importance of saving money is rarely disputed. Saving is one of the most basic bits of financial advice out there. Despite the importance of saving money, many of us aren’t following through on that tip. When it comes to doing the right thing financially, just knowing you should save isn’t enough.

And that makes sense. It’s tough to do something consistently without understanding why you should save money and put in all that effort in the first place. After all, saving money takes discipline and a certain amount of sacrifice.

Knowing the reasons to save money can be critical if you want to stick with a savings plan for the long term. If you need help understanding the importance of saving money, consider these three key reasons why you should save money now:

Saving can give you freedom

It can be tough to allocate some of your cash to a savings account if you don’t have a set goal for that money. Why save for later when you can spend on what you want today, right? But among the many reasons to save money is that even if you don’t know exactly what you’re saving for right now, you’ll likely find something you want to save for in the future. A new car, a new home, a child’s education… the possibilities are endless. Plus, it’s critical to have some cash set aside for emergencies and unexpected expenses as they come up.

“It has nothing to do with the money and everything to do with giving yourself flexibility and choice in your life,” says Eric Roberge, CFP and founder of a financial planning firm that specializes in giving financial advice to people in their 30s.

“When you have money available in the bank you can do what you want without stress,” he says. If you’re wondering why, you should save money imagine giving yourself freedom to choose what you want to do, rather than feeling stuck in a particular situation or position because you rely on the paycheck.

How much you should save depends on your financial goals. You may have a tangible goal you want to pursue, like taking a year off work to travel. In that case, you want to estimate how much you’ll need not only to cover the cost of travel, but also to cover regular living expenses if you don’t plan to make an income during this period.

If one of your reasons to save money is to gain flexibility, you can set a specific amount aside each month based on what you can afford to save after things like retirement savings and emergency fund contributions.

Roberge says that you could label that savings account your “build wealth fund.” The importance of saving money here is to give you cash reserves that you can use when and how you want.

Meeting life goals

Let’s face it, many of our life goals aren’t free. Anything from pursuing higher education to buying a home requires a certain amount of funding, which you’ll need to plan ahead for.

“If you have future goals — a big vacation, a child’s education, upgrading your home or vehicle — it can be important to begin saving now so you have the funds available when you are ready to achieve those goals,” says David Edmisten, the founder of Next Phase Financial Planning, a firm based in Prescott, Arizona.

The sooner you start saving for your goals, the more likely you’ll achieve them faster. It’s important to list your various goals and develop savings strategies for both short-term goals (such as a vacation or down payment on a house) and long-term goals (such as opening a business or retirement).

Saving money to provide a better future for your family

The desire to provide the best for your family, especially your children, is a powerful motivator to start saving. As a responsible parent, surely you want to ensure their needs are met. By building a strong financial foundation, you can invest in your children’s education, secure their well-being through life and medical insurance, or even start a family business that can benefit them in the long run.

By saving early and consistently, you can fund your desired retirement lifestyle and ensure financial stability during your golden years. With the current life expectancy in Malaysia reaching 75 years old, it is crucial to plan your retirement finances ahead of time.

To retire with a monthly income of at least RM2,000 for 20 years, you should save a minimum of RM600,000 by the age of 55. Starting your savings journey early allows you to take advantage of the power of compounding and gives your savings more time to grow. So, that’s why you should start saving now to ensure a comfortable and fulfilling retirement.

To sum up, the importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things. Pretty good reasons to save money, right?

If you’re convinced as to why you should save money, you can get in a savings groove by opening an online savings account. And good news: It doesn’t take a lifestyle overhaul to become a saver. There are simple ways to save money, which you can start practicing today. Once you’re in the habit of saving, you’ll forget there was ever a time when you didn’t save.