You may be asking yourself why there is so much pressure to save money. If you have enough to pay for everything you need, why should you worry about putting some aside each month? There is variety of reasons. Different people save for different reasons. People should save money for their future. Depending on your age, different people will come across different expenses. For instance: My friend hates saving money.
He thinks
there’s nothing wrong with spending it all and ‘enjoying life’. Well,
one day he had car problems and the bill was over half a million naira
for a new transmission and guess what, he had no money. So above all
it’s basically a safety net in-case something should unexpectedly
happen. Not to mention what if there is something you want to save up
for: house or a car maybe, or a vacation? Here are some reasons Miriam
Caldwell of “Money In Your 20’s” listed that you may consider to make
savings.
Save for emergency fund
It is
important to have an emergency fund set aside to cover unexpected
expenses. This could cover an unexpected car repair, your emergency
appendectomy or a sudden job loss. Ideally your emergency fund should be
about three to six months of your expenses. If you are just starting
out, you should put aside at least for this. In addition to your emergency
fund you need to make sure you have a plan and good insurance in place
to help you survive the unexpected financial event in your life.
Save for a retirement:
Another
important reason to save money is your retirement. The sooner you start
saving for retirement, the less you will have to save in the future. You
can put your money to work for you. As you continue to contribute
overtime you will be earning more interest on the money you have, then
you put in each month. You should at least be contributing up to your
employer’s match and eventually you will want to contribute ten to
fifteen percent of your gross income.
Save for a down payment for a house
Third reason
to save money is for a down payment on a house. Your negotiating power
goes a lot farther when you have a significant down payment towards your
home. You will receive better interest rates, and be able to afford a
bigger home. You can determine how much you save towards this each month
depending on your circumstances.
Save for vacation and for other luxury items
You can save
up for your tour of Europe or that Caribbean cruise. Additionally you
can be saving for fun large ticket items such as a Play station 3 or a
new boat. Your negotiating power is stronger if you have cash in hand on
bigger purchases. Plus you do not want to be paying off your trip
abroad in five years. Even if you save up for your vacation, you should
try to save for your vacation expenses
Save for a new car
You will be
amazed at how much money you can free up in your budget if you do not
always have a car payment. You can also negotiate the price of the car
much lower if you are willing to pay cash at the dealership.
Sinking fund
Sinking fund
is another reason one should consider, sinking fund is money you set
aside for future repairs or improvements on your car, home or other
possessions. This planning can help you to stop dipping into your
emergency fund every time you need to fix your car.
Finally,
your future education is also important, more people return to school to
earn their masters or doctorate degrees. You may also consider saving
for your child’s education when the time comes.
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