The importance of saving money
You may have found yourself wondering why the financial planners, as well as commercial media, have always emphasized saving money. By advising individuals who have enough payment for their bills should ensure that they set up some amount for collecting purposes. The saved amount is used as a security that can or will be applied at a future date for the purpose or opportunities that may present themselves in the future. Below is a discussion of the most reasons that are crucial and are motivational for one to develop a saving scheme as early as possible (Jha, 2019)p 390.
Saving for an emergency fund
It is very wise to have an emergency fund that is set aside for unplanned expenses. The unforeseen costs could include unexpected car repair or job loss. If the economy happens to be swaying, thus risking one’s position in the job they hold. It will be easier for one to cope with the period he or she will be searching for another post using the savings made before in sustaining their bills as usual. It also helps one to cater for medical attention from the savings made through insurance programs. Which cuts costs of the rising medical costs (Jha, 2019) p 392.. Don't use plagiarised sources.Get your custom essay just from $11/page
Saving for retirement
This clause particularly touches on the youths starting from the age of 20s to embark on saving for their retirement. The earlier they develop the saving, the more they are relieved with the burden of keeping almost everything in the future with the money they commit on saving now generating high interests, which can be used in the development of other projects of their choice. The focus on retirement is ensuring that one is in a stable financial condition. Despite having left the working industry, the retiree can commit some of the savings in developing a business that they can rely on to cater to their bills at retirement (Chen & Lakdawalla, 2017)p 1343. They can also use the savings made in the acquisition of a home, thus relieving them the expenses on rent, therefore, the ability to maintain their reputation in the society the same manner they used to while they were in the working class.
Saving to maximize the interest rates
When interest rates gap rise, people with investments in the form of savings are faced with the benefits of accruing marginal interests from their savings. They are also exempted from the effects of inflation as the people using a credit card will experience extraordinary expenditures. Due to the inflation effect, which is not the case of people with savings as they will use their cash, which is less expensive than the reliance on credit cards. Which are hit by the inflationary effects of rising in prices of goods and services (Te’eni-Harari, T,2016)p 46.
College education
Youths at the 20s are encouraged to adopt the habit of committing themselves into saving as much little as possible. Since the small savings will at some points become bulk and also enable them to access other beneficial programs such as secured loans. That is helpful to them in ensuring that they can meet their obligation in education qualifications by providing that they can sponsor their bachelors’ doctorate and master’s levels of education without having to rely on help from their parents( Klappe, Lusardi, Van,2015)p 45.
Developing of a saving attitude is not only helpful to an individual but also instills discipline on persons on how to tame their spending habits and limits exorbitant expenditures, which discourage saving due to overspending.
References
Chen, A., & Lakdawalla, D. (2017). SAVING LIVES OR SAVING MONEY? UNDERSTANDING THE DUAL NATURE OF PHYSICIAN PREFERENCES. Innovation In Aging, 1(suppl_1), 1343-1343. Doi: 10.1093/geroni/igx004.4931
Jha, A. (2019). Population Health Management: Saving Lives and Saving Money? JAMA, 322(5), 390. doi: 10.1001/jama.2019.10568
Klapper, L., Lusardi, A., & Van Oudheusden, P. (2015). Financial literacy around the world. Standard & Poor’s Ratings Services Global Financial Literacy Survey. Washington: Standard & Poors.
Te’eni-Harari, T. (2016). Financial literacy among children: the role of involvement in saving money. Young Consumers.