If you don’t make much money and are struggling to pay your bills, the thought of saving money may seem absurd. Why bother trying to save when you only have ₱500 left at the end of the month?
Because everyone has to start somewhere, and if you work hard enough, your financial circumstances will eventually improve. It is worthwhile to put in the effort to save money.
It provides you with peace of mind and possibilities, and the more you save, the easier it is to amass extra savings.
Peace of Mind
If money is tight, you might be concerned about how you’ll pay the rent next week. If you’re a little further up the economic ladder, you may be concerned about how long you’d be able to pay your bills if you lost your work.
Later in life, the money worries that keep you awake at night may include paying for your children’s college educations or having enough money to retire.
As long as you’re living within your means, your financial anxieties should subside as you collect funds. You’ll sleep easier at night if you have next month’s rent paid by the first week of the current month, if you know you can go three to six months without working, and if you have regularly funded savings accounts for your children’s education and your own retirement. Having money in the bank relieves tension, allowing you to focus on more enjoyable ideas and activities. Finding the greatest savings account is crucial to ensuring that the money you do save gets the most return.
The more money you save, the more control you have over your life. If your job is driving you insane, you can quit even if you don’t have a new job lined up yet and take some time off to regain your sanity before looking for new work.
You can move to a safer region if you’re weary of living in a hazardous neighborhood since you’ll have enough money for a deposit on a better apartment or a down payment on a nicer home.
Even if you can’t work while you’re undergoing treatment, you’ll be able to pay for it if you get sick and need expensive healthcare that your insurance doesn’t cover. Knowing that you have options thanks to your savings can give you even more peace of mind.
No, money will not fix all of your problems. It could take up to two years to locate a new job if you are laid off. Some ailments will not go away no matter how many surgeries you can pay, and even in a seemingly secure, gated environment, random crime can occur.
However, having extra money in the bank to deal with problems like these increases your chances of succeeding.
Money Working for You
To earn the majority of our money, most of us put in hundreds of hours of work each year. When you save money and put it in the correct places, though, your money begins to work for you.
Over time, as your money grows, you’ll need to work less and less, and you may finally be able to stop working completely.
What does having your money work for you imply? When you initially start saving, you’ll want to keep your money in a safe place where you can get it quickly in case of an emergency. That implies an online savings account, where you might only earn 1% interest per year and not even keep up with inflation, which runs around 1% to 2% per year.
You’ll also have to pay taxes on your low 1% earnings. However, anything is preferable to earning 0% or not having savings and falling into credit card debt, which would cost you 10% to 30% in interest per year.
You can start saving money in a tax-advantaged retirement account if you’ve saved three to six months’ worth of expenses in your emergency fund. It’s at this point when the magic begins to happen.
You could be able to retire in ten years if you have a high salary and modest costs. It takes about 40 years for the majority of people. However, if you save and invest on a regular basis, you should eventually be able to live off the income created by your assets, which is your money working for you.
The earlier you begin, the more time you have to watch a small sum of money develop into a large sum of money because of compounding.
The importance of saving money cannot be overstated. It gives you peace of mind, expands your alternatives for making critical decisions that affect your quality of life, and finally allows you to retire.
The majority of wealthy people achieved their status by a mix of their own hard work and wise savings and investment decisions. You, too, can be one of those people.