Personal Finance

Why You Should Be Putting Money Away Every Month

Putting Money Away

Putting Money Away

There’s a reason why people are always advising you to put away money every month.  Believe it or not, it’s not a conspiracy to get you to have less fun. There are many important reasons why you should be saving money.   Depending on your unique set of circumstances and goals, you may need money for different things.

However, there are some reasons to save that everyone can benefit from.  Here are some of the most important motivations for putting money into your savings account each month.  

Emergency Fund

An emergency fund is there to cover any expenses that come up, which weren’t anticipated.  It’s crucial that you have savings on hand to be able to cover whatever you need.

You never know what could go wrong, which could call for a significant amount of money.  You may require surgery, a tree could fall on your home, or a pipe could burst.  Life is good at throwing unexpected circumstances your way, so it’s critical that you have the means to survive.

Most financial experts recommend having at least $500 put aside in savings for emergencies, and ideally closer to $1000.

Retirement

You won’t be young and able to work forever.  You should have money set aside for the sunset years of your life known as retirement. The sooner that you start saving, the better.  

You should consider investing your money somewhere, which will significantly increase more than an average savings account, like an IRA.

Don’t wait until the last minute to put money aside for your old age.  Retirement is about enjoying the last phase of your life, not struggling to make ends meet.

Downpayment on a House

Paying rent every month isn’t a smart long-term investment.  Your money will go a lot further if it’s going towards something that you own.  If your goal is to own your own home one day, then you should put money aside for a downpayment.

The larger your downpayment is the lower your interest rate will be, and the bigger a loan you’ll be approved for.  The higher amount that you can afford to put down on a home means the more options that you’ll have to choose from.

Big Purchases

Big expenses come up several times a year.  Perhaps you want to take a family vacation, buy a new car, or buy a new computer.  Rather than dipping into your emergency fund, or running your credit cards into the ground, it’s ideal to have money set aside for these purchases.

That way, you have a nice amount of money set aside for things that you really want without having sacrifice not being protected if emergencies arise.

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