Why are savings important?

Saving money isn’t the most fun. Every time you think about doing it, you think of other, much more fun things that you could do with the money. Saving money means that you have less money to spend. That can be a pain. Saving money is very important, though. Having some money saved can stop you from getting into real financial troubles. Taking the time and making the effort to save now can pay huge dividends in the future.

You don’t have to save millions of dollars to make it worthwhile. Just putting aside a few dollars every month can make a huge difference in the long run. Little bits of money can quickly add up to a significant amount which can help when you really need it. In this case, when we talk about savings, we mean liquid reserves like cash or a savings account. Liquid means that you can quickly and easily access the money when you need it. Cash is liquid. Real estate is not. Here are three reasons why savings are important:

Emergencies.

If something comes up that you have not predicted and prepared for and it is going to cost you some money, it could create a real problem if you are not prepared for it. An injury requiring medical treatment, a major car repair or a trip that has to be taken at the last minute are all examples of emergencies. Without savings set aside, these situations can put you into a huge hole. By having money saved you are prepared for these unexpected emergencies and you can deal with them.

savingsMajor payments.

Say, for example, you are going on your honeymoon. The wedding was a bit more expensive than you anticipated and you are a bit short on money for your trip. You could use your credit card, but then you will be paying high interest rates on those costs, meaning your trip will cost you more than you intended. Instead, you can use your savings, which will cost you nothing in interest. The money you save in interest payments will let you build your savings up again quickly.

Peace of mind.

It seems that problems happen at the times when you are least ready to deal with it. Being in a situation where you are financially unprepared is very stressful. By having some savings built up you are ready for anything that might arise. This means that you are less stressed out and happier. Taking the time to build up your savings now will be more than worth it in the comfort and happiness it allows you to feel.