Why is it Important to Save Money

By: Want To Know It

About a week ago I wrote a list of ways to save money. Today, I am going to discuss the main reasons why you should save money.

Why Save Money?

• You can save for a new car, boat, plasma TV or other luxury items. While you can just pay for these with loans and credit cards, it is much better to pay up front so you don’t end up losing thousands of dollars paying interest on the items. You can usually get a discount when you pay for high priced items with cash.
• Emergency Funds. You never know what is going to happen. You may lose your job and you suddenly have no source of income to pay the bills. With the current credit crisis, the possibility of lost jobs are very real. There is also the possibility of theft or fire to your property (house or cars or other expensive items). While you may have insurance to cover this, you are still required to pay a deductible, which may be $500 or more. If you don’t have the cash, you are in trouble. A good idea is to have $1000 or more stashed away for emergencies.
• It is important to save up to pay your education, or the education of your children. If your are considering a masters or doctorate degree, you will need to save quite a considerable amount of money.
• Saving up for a deposit on a house is also vitally important. Your total amount owing to the bank for your mortgage and your interest rate will decrease when you can make a considerable payment on the property upfront. If you have no money to pay a deposit, your interest rate will be much higher and you lose money to the banks.
• Over a few years, you may be able to save several thousand dollars. You can then put this money into stable investments to make you even more cash. Money makes money!

Other Finance Posts:

Prepaid Credit Cards for Teenagers

Tips on Credit Card Consolidation

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