Do you need to know the benefits of saving money in order to get motivated? I answer why saving money is important.
We have felt the many benefits of saving money a lot over the last ten years. As my husband and I have jumped from unexpected bills to unexpected opportunities, our savings account has been a constant in our lives, ensuring we haven’t had to ask our family or friends for money.
Us prioritizing saving money since moving out of our parent’s homes (and even while living in their homes) has brought us so much relief and goodness in our lives, that I want to share with you all the benefits you’ll get by saving your own money.
What is the Importance of Saving Money?
The number one most important reason for saving money is because you’re building an insurance policy for yourself against life’s mishaps.
Life is going to throw you all kinds of curveballs. And while we would all like to just sit and watch our savings grow to be used one day for the things and experiences we want to be/do/have, the reality is, we’re going to need it for all kinds of unforeseen events.
This has happened time and time again in our own lives.
In a nutshell, over the last 10 years, we've:
- Been laid off 4 times (twice each — a nice balance!).
- Had our beater car die one month after plunking most of our savings down for a down payment on our home.
- Paid out $10,000+ medical bills for our son's birth + my 6-day re-admittance to the hospital due to complications (and that's AFTER my husband's health insurance paid the doc + patient claims out).
- Were sent to collections for a $1,097 medical bill we didn't owe, and had to fight for SEVEN MONTHS to get out from it (just this year). FYI it was a preventative checkup appt…which are 100% covered under the Affordable Care Act.
- Had our identity stolen and several thousand dollars siphoned off.
I could go on…but I'll just end it there.
Did we expect ANY of these things to happen? Nope. Were we RELIEVED that we had money in our savings account to use to get us through? You bet.
If all of these things can happen to a geeky money nerd, like myself, then they can certainly happen to you.
What are the Advantages of Saving Money?
We’re moving onto greener pastures now by talking about the advantages of saving money to get you pumped about doing it.
You are not only building a savings account by saving money, you are also building advantages that other people who do not save money will not have.
- Kissing the debt cycle goodbye: If you get into the habit of saving up money for the things you want to do in life, then you will kick the debt cycle to the curb. It’s an amazing thing. My husband and I paid off all our debt (except the mortgage) back in 2010. Since then, we’ve paid cash for everything, including a cruise to Alaska, a honeymoon to Austria, a new central A/C unit + furnace, a used car (at 66,000 miles), etc. All of this is possible for you, too.
- Not having to ask your parents/friends/family for money: Do you know how freeing it is when you don’t have to turn to others to get your financial needs taken cared of? And if you don’t have anyone you can turn to for help, then this one is even more important for you! When you ask others to spend their money to help you, you change your relationship with them. It can turn out, well, not so good. Instead, bail yourself out the next time you need it using your savings.
- Getting to Design Your Life: Have you ever heard of Lifestyle Design? It’s a pretty cool concept introduced by Tim Ferriss in his book, The 4-Hour Work Week. It’s basically you taking the reins of your life and designing it to be the way you want it to be. Doing “crazy” things like taking mini-retirements, having one person stay home to raise a baby, traveling the world, and quitting your job to start up a business. Do you know what will help make your lifestyle design a reality? Having an emergency savings fund to back you up.
- Getting to Retire: You probably want to retire one day. And by “retire”, I mean any number of things – like work on a passion project, travel to places you’ve wanted to go, taking on a job you’ve always wanted to do – that are not your current reality of the 9-5 job. Saving money (and investing it) is how you’re going to get there.
The fact is, those who save money are going to be in much better positions to make the decisions they want in life NOT based on money alone, than those who do not.
Is a Savings Account Worth It?
What is one advantage of keeping money in a savings account, and is it worth it to have a savings account?
I’ll actually give you several benefits of saving money in a bank, and then show you why it’s worth it.
Advantage #1: You earn interest on your money
If your money is sitting in a mason jar, piggy bank, your wallet, or wherever else you’ve stashed it over the years, then it’s not earning you more money.
But if it’s in a savings account? Well, then it’s earning interest.
Here’s an interest calculator you can play with to see how much your account can earn you money over the next six months, year, ten years, or however long you’d like. Play around with it.
Advantage #2: You protect your money
Banks are FDIC-insured, up to $250,000 per account, against a bank going belly-up (and that includes the dollars you put in, as well as any interest you earned on the money).
On top of that, putting your money into a savings account is a lot safer than keeping it at home. You could lose it, you could get it stolen from you, and you could spend it all without a second thought.
Which leads us to advantage #3.
Advantage #3: Makes you think twice about spending it
Since it generally takes a few days to transfer your money from savings to a checking account and then withdrawal it, it gives you a “cooling off” period before you actually spend it. This is a good thing!
So, is a savings account worth it? I should think so!
Why is it a Good Idea to Save Money?
I hope I’ve shown you tons of reasons for why it’s a good idea to save money. Your next question should be, what should I save money for? Figure that out with my guide on how to save money.