The importance of saving your money cannot be underestimated. Making regular savings is one of the best financial habits you can develop. Some experts even say the habit of saving is just as important as the amount you actually save. But why exactly should you be paying more attention to growing your savings?
The most important reason for saving money is the financial security it can bring. Developing a savings habit will enable you to be financially secure in the future, as well as providing a safety net in case of emergencies or unexpected life changes. While it is tempting to spend money as soon as you receive it and to satisfy your immediate wants, here are four reasons why it is important to become a saver:
- Financial security: Building a savings habit can help you become financially secure at an earlier age and protect you should something bad happen, such as losing your job.
- Unexpected expenses: We have all been hit at some point by a bill that was higher than expected, or the need to make urgent home improvements or fix a broken car. Having savings in place means you are ready to cover these costs without having to take out a loan.
- Changes in life circumstances: Getting married, having children, moving home. These important life events are much easier to manage if you have available savings.
- Retirement: Depending on your age, retirement may seem a long way off right now, but when the day arrives, it will be much easier if you have savings to depend on.
Once you understand the importance of savings, you need to know the best way to develop the savings habit. Here are some suggestions
- Do it straight away: Put money into your savings account on pay day or set up a regular bank transfer from your salary account to your savings account.
- Be regular: It is important to maintain the savings habit. Even if your financial situation changes and you are unable to save as much as before, it is a good idea to keep trying to save at least some amount each week or month.
- Create a financial plan: Set some achievable goals (the reasons you are saving money) and budget your income by how much you need to spend and how much you have to save.
- Pick the right account: Talk with your bank about the best account for your needs, as well as the best options for you to make interest on your savings. If you are a long-term saver, do not forget the benefits of compound interest.
- Don’t spend pay rises: Whenever you receive a pay rise, try not to ‘upgrade’ your lifestyle with more expensive restaurants, nicer holidays, fancier clothes etc. While it is tempting, maintaining a modest lifestyle will mean you will reach your savings goals a lot faster.
By now, you will appreciate the importance of savings and the best ways to get into the habit of savings. Remember, it is never too early to become a saver. Even a small amount, saved on a regular basis, will eventually add up. So don’t wait – start your savings journey today. You can always speak with a Chubb Life Financial Advisor who will discuss your needs and explain the solutions that are suitable for you.
