Saving money can often be a challenge, especially during times of financial uncertainty. But saving money is a critical component of financial wellness. Here, we break down why saving (even a small amount) can make all the difference.
Saving helps to:
- Prepare us for emergencies. Putting aside a set amount each month helps protect us in a financial emergency. Perhaps a surprise medical bill, car repairs or temporary loss of income. Plus, building up emergency savings to cover unexpected expenses is better than using high-interest credit cards or taking out a loan. An emergency fund gives you peace of mind and prevents you from going into debt.
- Set us up to manage planned expenses. For those anticipating making large purchases, saving money can help us prepare our budget to pay for expenses that we plan to take on - such as a down payment on a car, home improvements or an upcoming vacation. When you plan ahead, you take control of managing your monthly income.
- Reduce stress. It can be overwhelming to have bills and expenses that we strucggle to pay each month. When you build up savings, you reduce the stress many of us feel about our to the "buffer" savings gives you. When you build up savings, you reduce the stress many of us feel about our finances and give yourself a gift - peace of mind.
- Provide a sense of freedom. Knowing that a savings "nest egg" exists gives people more freedome to choose how to handle their finances, rather than feeling stuck in a particular situation. Setting aside even $20 a paycheck is prven to provide a feeling of freedome due to the "buffer" savings give you.
How do I start a savings plan?
- Assess your budget. Get a handle on your monthly income and typical expenses.
- Commit to a monthly savings amount.
- Automate your savings. That way, you'll be able to set it and forget it by paying yourself first through automated deposits.
- Maximize Interest. Consider a money market or other higher interest account.
- Make it a family affair. Setting a savings goal with loved ones lets you come to a consensus about goals and dreams. That way, it is easier for you all to plan and encourage each other to save for emergencies, planned expenses or other goals.