Importance of Saving Money Part1
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| Saving Money |
One of the key factors
for your financial freedom is developing the habit of Saving. Saving sounds
simple, but it's not always easy to do with the kind of life we are living. Unfortunately,
majority of people start realizing importance of saving money when it is too
late. Good Financial Planners realize every one need to save today's earnings
for expenses they will have to face in the future.
Everyone might
be hearing about Saving Money…. And you may
be surprised why is saving so important?.
be surprised why is saving so important?.
It may be hard
to imagine saving money, but take a look at how quickly putting aside just Rs.100
a week can add up:
Consider this one:
setting aside just Rs.200 each week, can add up to over Rs. 50,000 in six years!
There are so
many reasons to save; but the most significant reasons to save money are:
1) For
Liquidity: Whenever you
need cash urgently for some emergency purpose, you can use from your short-term
savings like Bank Savings Account.
2) For
Major Purchases:
Purchases which you can’t afford with your regular income can be obtained
through saving for it. The more money you save ahead of time for these types of
expenses, the less you will pay in interest charges in the long run.
3) For
Security: Accumulate at least
6-9 months income/salary as cash reserve for security purpose. In case suddenly
you lose your job, with this saved money you can continue to make your minimum
payments and avoid late payment fees and other penalty charges.
4) For
Living your Dreams:
Everyone has their own goals/hobbies/dreams like a big wedding, a trip around
the world, luxurious car/home, Apple Smart Phone/Laptop etc., setting goals and
working to achieve them is a mark of happy and successful people. Start Saving
money from your own income to fulfill your dreams for having a better lifestyle.
This way you will have a sense of achievement. You will take pride in your
abilities and your self esteem will also get a boost.
5) To
pay for Self / Children’s College Tuition: If you/children are considering a masters or doctorate
degree, you will need to save quite a considerable amount of money.
6) For
a Down Payment for a New House or Car:
It is better to save until you have down payment of at least 20% or more in
hand. So that you will be having a good negotiation power. When you have bigger
down payment amount, you will get better pricing/lower interest rate/reduced
payment on mortgage.
The remaining importance of saving will be continued in the next post…
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