Saving money can often be a challenge—especially during times of financial uncertainty. As humans, we’re wired to take care of our needs now, and worry about later… well, later.
However, saving money is a critical component of financial wellness. As we get closer to the holiday spending time of year, here are tips to saving (even a small amount) now vs. later can make all the difference:
SAVINGS HELPS TO:
- Prepare us for emergencies
Putting aside a set amount each month helps protect us in a financial emergency. Perhaps it’s a surprise medical bill, car repairs, or temporary loss of income. There are many reasons why an emergency fund is critical to help handle unexpected expenses. Plus, building up emergency savings to cover unexpected expenses is better than using high-interest credit cards or taking out a loan. An emergency fund gives you peace of mind and prevents you from going into debt.
- Set us up to manage planned expenses:
For those anticipating making large purchases, saving money can help us prepare our budget to pay for expenses that we plan to take on – such as a down payment on a car, home improvements, or an upcoming vacation. Emergency savings are also useful for smaller cash outlays like costs for pets, car maintenance and other important bills Here again, by saving up for planned purchases whether they be the significant expenses or lower cost items, we can avoid using high-interest credit cards or taking on other debt. When you plan ahead, you take control of managing your monthly income.
- Reduce stress:
Financial stress is real. It can be overwhelming to have bills and expenses that we struggle to pay each month. In fact, many researchers see a significant connection between financial stress and mental health and well-being. During the ongoing pandemic, financial strain is felt by the newly unemployed, furloughed, and those still working but facing an uncertain future. When you build up savings, you reduce the stress many of us feel about our finances and give yourself a gift – peace of mind.
- Provide a sense of freedom:
Gaining a sense of freedom might not be the first reason that comes to mind as a benefit of setting up a savings plan. Setting aside even $20 a paycheck is proven to provide a feeling of freedom due to the “buffer” savings gives you. Knowing that a savings “nest egg” exists gives people more freedom to choose how to handle their finances, rather than feeling stuck in a particular situation.