3 reasons why you should start saving money today (2024)

Saving money takes discipline. And a certain amount of sacrifice.

According to a Bankrate survey, many Americans are behind in saving for retirement, while some Americans aren’t saving at all.

The importance of saving money is rarely disputed. Saving is one of the most basic (and most repeated) bits of financial advice out there. Despite the importance of saving money, many of us aren’t following through on that tip. When it comes to doing the right thing financially, just knowing you should save isn’t enough.

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And that makes sense. It’s tough to do something consistently without understanding why you should save money and put in all that effort in the first place. After all, saving money takes discipline and a certain amount of sacrifice.

Knowing the reasons to save money can be critical if you want to stick with a savings plan for the long term. If you need help understanding the importance of saving money, consider these key reasons why you should save money now:

1. Saving can give you freedom

It can be tough to allocate some of your cash to a savings account if you don’t have a set goal for that money. Why save for later when you can spend on what you want today, right? But among the many reasons to save money is that even if you don’t know exactly what you’re saving for right now, you’ll likely find something you want to save for in the future. A new car, a new home, a child’s education… the possibilities are endless. Plus, it’s critical to have some cash set aside for emergencies and unexpected expenses as they come up.

“It has nothing to do with the money and everything to do with giving yourself flexibility and choice in your life,” says Eric Roberge, CFP® and founder of a financial planning firmthat specializes in giving financial advice to people in their 30s.

“When you have money available in the bank you can do what you want without stress,” he says. If you’re wondering why you should save money, imagine giving yourself freedom to choose what you want to do, rather than feeling stuck in a particular situation or position because you rely on the paycheck.

How much you should save depends on your financial goals. You may have a tangible goal you want to pursue, like taking a year off work to travel. In that case, you want to estimate how much you’ll need not only to cover the cost of travel, but also to cover regular living expenses if you don’t plan to make an income during this period.

If one of your reasons to save money is to gain flexibility, you can set a specific amount aside each month (hint: automate your savings) based on what you can afford to save after things like retirement savings and emergency fund contributions.

Roberge says that you could label that savings account your “build wealth fund.” The importance of saving money here is to give you cash reserves that you can use when and how you want.

2. Saving provides financial security

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“I love saving money because it means financial security,” says Kara Perez, who founded a financial education company that aims to empower women by providing them with the tools and education to reach their financial goals.

“Plain and simple, having money makes your life easier,” Perez says. “I save because I want my future self to have the same great lifestyle I have now, and I don’t want to get caught in a financial emergency.”

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Perez recommends putting money in both a liquid savings account where you can keep cash for unexpected expenses and emergencies, as well as putting money into something like a brokerage account where you can invest for the future.

3. Saving means you can take calculated risks

Part of the importance of saving money is to build cash reserves so you can take calculated risks with less worry. If you don’t have any savings, it may be harder to pursue certain passions. Take starting a business, for example. To be a small business owner, you’ll need financial backing to get it off the ground.

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But if you set a savings goal and contribute to your savings each month, you can explore new opportunities, even if they may temporarily impact your earnings (if you set off as a small business owner, paychecks could be slow to come at the start).

“Saving gives you the freedom to live life on your own terms,” says Matt Becker, CFP® and founder of a financial planning practicefocused on new parents.

“When I lost my job three years ago, my wife and I used that as an opportunity to start the businesses we’d been dreaming about, rather than scrambling to find another paycheck as quickly as possible,” Becker says. “We could only make that decision because of the years we’d spent building our savings.”

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Why you should save money

The importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things. Pretty good reasons to save money, right?

If you’re convinced as to why you should save money, you can get in a savings groove by opening an online savings account. And good news: It doesn’t take a lifestyle overhaul to become a saver. There are simple ways to save money, which you can start practicing today. Once you’re in the habit of saving, you’ll forget there was ever a time when you didn’t save.

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3 reasons why you should start saving money today (2024)

FAQs

What are the three basic reasons for saving money? ›

There are three basic reasons to save money. First, we save for an emergency fund. Second, we save for purchases. Third, we save for wealth building.

What are 5 benefits of saving money? ›

5 Reasons to Save Money
  • Long-Term Security. Among the many advantages of saving is the long-term security it provides you. ...
  • Saving money is a step towards financial independence. ...
  • Saving money enables you to take calculated risks. ...
  • Savings Reduce Stress. ...
  • Compound interest can be benefited from savings.

Why should I start learning about money today? ›

Achieving financial literacy can help individuals to avoid making poor financial decisions. It can help them become self-sufficient and achieve financial stability.

Why do we need to save money? ›

The importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things.

What is the 3 saving rule? ›

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

What are the three main reasons for money? ›

To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange.

What are 3 benefits advantages of saving your money at a bank? ›

Saving at a bank helps you manage your finances in a more organized and planned manner. Having a savings account lets you separate funds used for daily needs from savings funds. You can also check your savings funds' incoming and outgoing flows through neatly recorded transaction history or account mutations.

What are two benefits of saving? ›

First and foremost, though, savings enable you to prevent financial disaster when something unexpected—like losing a job, your car breaking down, or having a sick child or pet—happens. Similarly, savings support positive changes and enable you to plan for financing a home, retirement, and vacations.

What are the five advantages of money? ›

The role of cash
  • It ensures your freedom and autonomy. Banknotes and coins are the only form of money that people can keep without involving a third party. ...
  • It's legal tender. ...
  • It ensures your privacy. ...
  • It's inclusive. ...
  • It helps you keep track of your expenses. ...
  • It's fast. ...
  • It's secure. ...
  • It's a store of value.

How important is money today? ›

Human beings need money to pay for all the things that make your life possible, such as shelter, food, healthcare bills, and a good education. You don't necessarily need to be Bill Gates or have a lot of money to pay for these things, but you will need some money until the day you die.

Why do we use money today? ›

It is used as a medium of exchange between individuals and entities. It's also a store of value and a unit of account that can measure the value of other goods. Prior to the invention of money, most economies relied on bartering, where individuals would trade the goods they had directly for those that they needed.

Why is money most important? ›

Having money makes it possible for you to start a business, build a dream home, pay the costs associated with having a family, or accomplish other goals you believe will help you live a better life. Money gives you security.

How to start saving money? ›

5 simple steps to start saving
  1. Set one specific goal. Rather than socking away money into a savings account, set specific goals for your savings. ...
  2. Budget for savings. Just because you decide to save doesn't mean it's going to happen. ...
  3. Make saving automatic. ...
  4. Keep separate accounts. ...
  5. Monitor & watch it grow.

What are the positive effects of money? ›

There are obvious advantages to having more money. You can live in a nicer house and drive a nicer car, take better vacations, provide quality education for your kids, gain improved access to medical care, and have a more comfortable retirement.

What are the three factors of saving? ›

Quick summary of factors that influence saving levels
  • Interest rates – higher interest rates make saving more attractive.
  • Rising income enables higher savings. ...
  • Economic growth – high growth and high consumer confidence encourage relatively higher spending and a fall in the savings ratio.
Jan 6, 2021

What are the three broad reasons for saving? ›

The three broad reasons for saving, as identified by economists, are reasons relating to: consumption, investment, and exports.

What are the three main reasons for saving your hard earned money? ›

Emergency, large purchases, wealth building - The main reasons for saving your hard-earned money. 3-6 months of living expenses - The standard used to determine how much should be held in an emergency fund.

What are the basics of saving money? ›

Pay yourself first.

Determine a set amount of money to put away every month and treat it like any other bill. Put away part of every paycheck — ideally 10 to 12 percent — and watch your savings grow.

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