Saving Money: How Important Is It?

Whether you’re saving up for a down payment on a house, budgeting for a vacation, or nothing in particular, having a savings account is important. It’s your just-in-case money—for all of life’s unexpected twists and turns. And it’s too bad that the importance of saving money is not taught in school before we go out into the working world. When most of us get our first paycheck, we are thinking where we want to spend it. But it can be just as exciting and more rewarding to put money into your savings account with each paycheck you receive.

No matter what age you are, a savings account is important. You can never be too young or too old to start saving. And here’s why you should be.

The Big Purchase
Having a savings account is important if you plan on buying property, whether a house or a condominium. You’ll want to have sufficient funds for a down payment. The more money you can put down, the better. This cuts down on the amount of interest you’ll pay significantly. The less money you owe, the less you’ll pay each month in interest.

Even if you are still a college student and buying a house seems way off in the distant future, you should be saving up now for big future purchases such as this. When you begin to think about buying property, you don’t want to all of a sudden be scrambling to save every penny of your income for a down payment. It’s better to start early so you will be prepared.

The Semi-Big Purchases
If you want to buy a new car, computer, or television, a savings account can also be helpful. Although you should generally think of the money in your savings account as untouchable in order to keep building it up, it’s smart to have this money available.

You might think of your credit card as your reserve fund but that can be dangerous. If you were to charge a new computer or television on your credit card but did not pay it off in full when the bill was due, your credit card balance will skyrocket from interest rates. It’s better to pay it off on time and then get back on the saving train.

The Emergency Fund
Unfortunately it’s impossible to predict every little expense life is going to throw our way. Your cat or dog might get sick, and you have to take them to the vet. Or you need to have plumbing or electrical work done in your house. There are always going to be emergencies that come up, and these instances will be much less stressful for you if you have an emergency fund or specially designated savings account to serve as your rainy day fund.

Once you get into the habit of saving as much as you can from each paycheck, it will be easy to keep going. It’s exciting to deposit money into your savings, and it doesn’t mean you can’t go out to dinner once in a while or go shopping. You should still treat yourself now and then, but in the very beginning, try to focus on saving money to generate momentum.  Then you can relax, knowing you have a back up fund for all of life’s surprises and you’re on your way to a down payment on a house.