There are many good answers to the question why save money? The most important of the reasons is that saving is insurance for the future. Too many people live life on the edge thinking they will be protected later down the road. In life, there are many unforeseen expenses that could ruin you.
When I first came to Austin, TX, I was happy. One of my friends told me to come over to hang out and I, in a really good mood, said yes. It was around 10pm at night. However, my mood quickly turned sour when someone put a wooden pallet smack out in the middle of the highway.
Given that it was 10:00pm at night, I didn’t have time to swerve away from the pallet. The result was that it ended up giving me a flat tire. It costed me $300 to replace one stinking tire. One. Stinking. Tire. This is why having a robust emergency fund matters tremendously.
I did not plan to pay $300 for a tire that day. All I wanted to do was enjoy the company of a friend who I like. But that plan was thwarted by the pallet and the cops coming to rescue the many people who suffered from the pallet.
Good thing everyone was safe and no one was injured but imagine if someone became injured as a result.
As a result of someone else’s fault and wrongdoing. Someone who will never get reprimanded and/or punished to make the victims whole. This is one of the many reasons on why save money. Too many people live paycheck to paycheck without having a good cushion and margin of safety in their life.
Why Save Money? 9 Benefits
Why save money? The first benefit is that you have room to SMASH that social share button and post to your favorite social media! If your friends aren’t the kind to save money, they can be encouraged with this article. If anything, please consider sharing for me.
So with that said, let’s go over the 9 benefits to saving money!
1) Saving Money Ensures Your Family’s Future
If you want car insurance, then you need to purchase insurance from one of the big car insurance companies. However, if you want insurance against a catastrophic financial crisis event, you can’t insure yourself against that. There’s no company who offers that as a benefit currently.
However, that doesn’t mean you can’t create your own insurance. Why save money? You’re creating insurance for your family to prepare for devastating and catastrophic financial events such as a financial crisis. 2022 shed light into how little the government understands in creating a healthy economy.
Through no fault of their own, many people lost their jobs due to the government’s easy money policies. Tesla barely started layoffs in June 2022 and some cut 10% of its salaried staff. Some employees literally joined a couple of weeks ago and are getting the boot.
Layoffs happens at a moment’s notice. If you don’t think it can’t happen, think again. No one is safe.
2) Saving Money Gives You Options
Sure, you may have a job that pays $300k/year and think that you’re set for life! As long as the cash flow comes in, who cares about the future! However, that’s not how it works. Someone who makes $300k/yr and saves nothing is worse off than someone who makes $50k/yr and saves even just a dollar.
If you save money, it gives you options to one day say no to more projects. If you don’t save money, you always have to say yes to a company. You have no other choice. If, as a result of you saying no, the company decides to kick you out, you don’t have any options.
Because you then have to take the next available company who’s willing to offer you a job.
I’ve seen people’s LinkedIn go from “Managing Director” to “Analyst” due to the financial crisis leading to layoffs. They had no other choice! They needed to pay the bills someway. Why save money? So that it gives you options.
A financially independent person could’ve been able to weather the storm for years.
3) Saving Money Gives You More Confidence
When you have a cushion and a buffer to fall back on, you have more confidence to undertake more projects. You can take on more risk. Ironically, it can make you even more money because you have the ability to take on more risk. Many people I’ve met highly disliked saving money.
Especially the younger folks. Many of them mocked me because I wanted to save so much money. It used to bother me before but it doesn’t bother me anymore. If people don’t want to protect their financial future, I am OK with that. However, you don’t want to emulate their behavior.
You don’t want to be scrambling for what to do when the worst happens and therefore can only put out a hail Mary type bet on yourself. You want to always be in a position of strength and in a position of confidence. Why save money?
It gives you a level of confidence that just can’t be explained. Life just feels better when you have backup plans.
4) Saving Money Lets You Invest It
Investing is how the rich get richer and the poor get poorer. The rich get richer because their assets are paying for their life. The poor get poorer because they have no other income sources besides their day job. Why save money? It lets you move up in class and move up in life.
You can continuously invest the money and make an infinite amount.
There’s no cap on the amount of money you can earn in America. The more you save, the more you have in order to invest it. Your income should buy more income. When I first started my financial independence journey, it used to take me 1 – 2 months in order to invest $3,000 into the market.
Now, I can do that in a single paycheck. How great is that? I know that I’m going to be thankful 10 years from now. I know that in 10 years, those savings that I do will protect me from any economic recessions that I know I’ll face in my lifetime. Investments are how you get wealthier.
5) Saving Money Prepares You For Emergencies
The $300 that I spent when my tire blew out in the middle of the highway was an unforeseen expense that I had to spend. On top of that, there are many emergency expenses that pop up out of nowhere. I got into a car accident in March 2022 and had to pay for another car.
Imagine paying for another car when car prices were reaching all time highs in March 2022. The car failed to yield at a stop sign out of nowhere and caused the accident. Emergencies just happen without any sort of warning at all whatsoever. Why save money?
People don’t think emergencies won’t happen to them until they do.
It’s just the worst feeling in the world when you have to shell out money and pay out of pocket for something that wasn’t your fault. For something that was someone else’s fault. However, it will happen to you one day in your life. It’s not a bad idea to prepare for that day when it comes.
6) Why Save Money? Financial Independence
No one ever became financially independent without saving money. If financial independence and becoming rich beyond your wildest dreams appeals to you, then it starts with a single dollar of savings. No one became a millionaire or billionaire without saving money.
Why save money? Financial independence is calling your name. I have a net worth close to the top 3% for my age group. It was only possible because I saved so much money at the beginning. My younger self put in the dues.
Although I’m still saving and investing a majority of my money, I no longer need to grind as hard.
Financial independence will be great. That’s when you can choose to work because you want to. Not because you have to in order to pay the bills. Dependence is one of the worst things you can do in this entire world.
One day, the person you’re leaning on may just decide to let you go without a moment’s notice. Stand on your own two feet.
7) Saving Money Lets You Buy a House
The more of a downpayment you can put down, the better off you are. You don’t have to pay PMI insurance. Furthermore, you don’t have to pay as much interest to the banks. The recommended down payment you should put down on a house is 20%.
One of my good friends was pressuring me to buy a house in March 2022.
He just told me to put down 3.5%. I resisted every single attempt and I’m glad that I did. People were still paying six figures above asking just to buy a house! That’s insane! You don’t want to buy a house just for the sake of having a house. You want to buy a house when you are financially stable enough to do so.
Why save money? When you’re renting, you’re at the mercy of the landlord. If the landlord decides to increase your rent by $800/month (which happened in 2022), there’s nothing you can do. You have to move out or pay the higher price.
That kind of thing doesn’t happen when you own your own house. Principal and interest payments are fixed.
8) Saving Money Lets You Get Ahead
At the start of the coronavirus pandemic in March 2020, people were doing very well with their savings. Savings rate went as high as in the 30%’s. However, as the pandemic lingered on, consumers saved less and less. As of May 2022, America has a personal savings rate of 5.4%.
The insanity! People do not think that there’s any sort of rainy days that are going to come ahead. The bear market of 2022 taught us that bad things don’t just happen. They happen quicker than anyone can ever think of. Why save money?
It lets you get ahead than other people who are only saving 5.4% of their money.
You don’t need to be smart, you don’t need this natural talent that no one else has in the world except you. All you need to do is know how to set aside a percentage of your paycheck in order to get ahead and become wealthier. That’s what’s great about the personal finance game.
9) Saving Money Prepares You For a Recession
The bull market that started since 2011 spoiled may investors rotten. Many people thought that the party would never stop. Janet Yellen personally said she doesn’t see a financial crisis happening “in our lifetimes”. I don’t know how well that will hold into 2023/2024.
The bear market of 2022 taught everyone things can change in the blink of an eye.
People think recessions won’t happen until they do. Recessions are not something you control. The ones who diligently save during bull markets will come out ahead in bear markets. The ones who saved and invested money no matter what and kept some on the sidelines.
Why save money? Recessions will happen in our lifetimes and saving money prepares us for that. You don’t want to be scrambling, desperately trying to find any employer who’ll hire you. You want to take your time and think through the next career move you want to do.
Why Save Money? It Protects Your Future
There’s nothing wrong with living in the now. However, living too much in the now without thinking anything about the future is dangerous. Why save money? It’s about your future. Sure, there’s a worry that by trying to live too much in the future, you’re missing out on the now.
However, that doesn’t mean that your future won’t come. The people who live in the present because they don’t know if tomorrow will come doesn’t understand statistics. The probability of death for people in their 20’s is very low.
It doesn’t make sense living like there’s no tomorrow because there’s a higher likelihood tomorrow will come.
Living too much in the present means you miss out on your future. There’s nothing wrong with wanting to sacrifice today for a better tomorrow. There are many people who live in the present and look down on people who don’t live in the present.
Then when they see others who’ve sacrificed the present for a better tomorrow, they get bitter.
You have to protect your own future because no one else is going to do it for you. Social security may not even cover your living expenses, let alone be there when it’s time for you to retire. There’s no point in hoping for an inheritance to take care of you down the road.
You have to stand on your own two feet. When you depend on someone else to do it for you, remember that they’re not going to do it for free. There are no free lunches. They will want something in return from you later down the road. Why save money? Because no one else is going to save you.
Why Save Money? 9 Benefits Shortlist:
- Saving money ensures your family’s future
- Saving money gives you options
- Saving money gives you more confidence
- Saving money lets you invest it
- Saving money prepares you for emergencies
- Financial independence starts from saving
- Saving money lets you buy a house
- Saving money lets you get ahead
- Saving money prepares you for a recession
