It could be the case that you often have people telling you that you should make more effort to save money. This can be really annoying and you might wonder why you should be bothering to save and what is so good about it. It is worth having an understanding of why some people save money and that might help you to decide whether saving will be a good idea for you.
- For a rainy day – we might hear people saying that they are saving for a rainy day. What they actually mean is that they are putting aside some money for the future to fall back on. This means that if they need some extra money, perhaps in an emergency to pay for something or if they want to treat themselves to something new, they will be able to do so because they have the money put by. It can mean that they can pay for things rather than taking out a loan. This will be cheaper and quicker than a loan as well and can give you peace of mind to know that the money is there for when you need it.
- To save for something specific – many people will save up with something specific in mind. It might be that they are saving to go to university or for their children to go, for a holiday or to get married. There are all sorts of things that we might save up for. Saving like this can be really beneficial. We will appreciate the items more because we have taken the time to save up for them. We will also have time to think about whether we really want the item. It takes hard work to save up and we may decide we would rather spend that hard-earned money on something else.
- To pay off a loan – it could be that people have a loan that they want to repay quickly. They may decide to put some money aside and then when they have enough they will use it to repay their loan. Repaying a loan early can save money because you will not have to pay so much interest on the loan. However, some will have a charge for repaying early and you will need to calculate whether it is worth paying this charge or not. If you do not have long before the loan is due to be repaid anyway, it might be less worthwhile as you will not have many interest payments to make.
Saving can also be a lot easier than you might imagine. Often people will wait until just before they get paid and see if they have any money left to save and often there is nothing left. However, if you set up a direct debit to pay some money into a savings account each month before you spend any, then you will find it easier. We will often find that we spend the money that we have, but if there is not much left, we will not be able to. Therefore, if we save the money first, it will not be available to spend. The amount that you choose to spend will be determined by how much we can afford to save. Make sure that you have enough money to pay your essentials and se what is left for treats. Take a bit of that money to save. It might seem hard but it will good when you can save up for that item you really want or have some money to cover an emergency should you get one. Knowing that you have some money behind you can give you peace of mind.