10 Reasons Why You Should Save

With credit so easy to get, why would anyone want to save money and buy with cash? If I want something, I can buy it and then pay it back with payments that I can make over a period of time. If I can afford the payments, why not do this? The unfortunate thing is that this sort of thinking makes sense to many people these days and gets them what they want faster… or so they think.

Here are ten reasons why you should save.

1. Get Rich

If you ever want to be rich, you’ve got to save. Take it from old Ben Franklin. He said, “If you would be wealthy, think of saving as well as getting.” He got his picture onto the front of the American $100 bill, so maybe he did know what he was talking about.

Seriously, though, if you ever want to start your own business or invest with some smart person who is starting their own business, you have to have some money saved to invest in yourself or anyone else—you can’t just put it on your credit card or expect the bank to give you the money (because they won’t).

2. Save 50% on everything you buy + 24% on Groceries

If you are used to putting all of your purchases on credit and then you don’t pay off your credit cards every month, because of interest, you are probably paying at least 50% more for everything you buy. If this is you and you saved some money and then bought things out of your savings, you could save 50% on everything you buy!

If you have savings, you can save even more. People who have savings can buy things when they are on sale and take the time to make better choices when they do go to buy. People with savings can also stockpile on groceries when they are on sale (stuff that is non perishable or can be frozen). One author suggests people who do this can possibly skip one grocery shop a month and save 24% a year on their grocery bill.

3. Buy a Home

The bank won’t lend you money to buy a house unless you have a down payment, and you are not allowed to borrow a down payment. You must have this money saved up or have someone give it to you—and not lend it to you. Your down payment needs to be at least 5% of the purchase price of the house, and then the bank will consider lending you the other 95%. There are all sorts of other costs and fees that you need to pay when you buy a home, so you will need an additional 5% just for those costs.

4. Buy a Car

When you want or need to buy a new car, you will need to have a down payment in order to get a car loan at a reasonable interest rate. You could of course “borrow” the money from your credit card, but at 20%, how is that getting you ahead? Zero percent financing is reserved for great customers, so a car loan is bound to cost you something—and it could be a lot. The best thing you can do is save up as large a down payment as you can afford, and then consider your options. Maybe buying a quality used car rather than a new one will be what it takes to get you the vehicle you want .

5. Get Out of Debt

If you ever want to get out of debt, you have to have some money saved. The credit cards are never going to get paid off if you have to keep using them for every “emergency” that comes along. Before you start paying off your credit cards, you should save up $500 to $1,000 as a reserve fund. Then when unexpected things come up, you can pay them out of your reserve fund rather than put them on your credit cards. Maintaining a “reserve fund” will also help you to notice if your spending is getting out of hand. For more tips on getting out of debt, click here.

6. Annual Expenses

If you want to have a good, relatively stress-free life, you need to save for annual expenses. These may include money for gifts, vacations, vehicle maintenance, minor home repairs, fixing appliances, property taxes and possibly income tax. It is dangerous to endlessly put these expenses on credit without paying them off. The best way to manage these types of expenses is to save for them in advance. This will not only save you money, but it will give you peace of mind. To learn how to budget for annual expenses, click here.

7. Unforeseen Expenses

What will you do if your car needs some major repairs? Do you have $500 to $3,000 on hand? What if your house needs some repairs, or it is discovered that you are living in a leaky condo? You can’t count on the bank to lend you money for all of these things. It is much better to anticipate a worst case scenario and have some money saved.

8. Emergencies

As much as we hope that emergencies won’t happen, we all know that they do. A family member can develop a health issue, you might need to make an emergency trip, you may have a car accident, severe weather could flood your basement or you may have to pay for a loved one’s funeral. Any of these emergencies can be expensive, and we all know that we will likely encounter some sort of emergency from time to time. So why not be prepared rather than potentially become another victim of an emergency.

9. You could lose your job or get hurt

In good times, everyone thinks that their job is secure, but in bad times, many begin to realize that bad things can happen to anyone. You can lose your job, your business can dry up, you can get injured—either physically or psychologically or become too sick to work. Any of these things can happen to you. Employment Insurance doesn’t kick in until you have been unemployed for 6 weeks. Do you have enough savings to tie you over or will you be living on credit. Living on credit during a time like this can quickly make a bad situation worse. Minimum payments become higher and higher until they are unaffordable and credit limits no longer budge.

10. To have a good life

There are huge emotional, psychological and physical consequences to always living stressfully, from hand to mouth. People who don’t plan for their future seem to run from “crisis” to “crisis.”

There is a little known truth that happiness can come from being organized. Being organized isn’t going to make you happy all by itself, but it can sure help. There’s so much in your future that you don’t have control over, so putting aside savings for your future is organizing and taking control of your future—to an extent. You have nothing to lose by saving and a happier future to gain.

Next: Learn How to Save