Are you lost in the madness that is your current bank account? Maybe you feel like you ‘should’ be saving money but seriously what’s even the point?
Well here’s the deal: this is your money and it plays a big role in your life.
You can treat money like the tool that it is! You should get to tell your money, that you work hard for, what it should do for you.
Saving money along the way will help with living your best life. The way you spend and save your money should align with your values.
So if you want to know the importance of savings and how to actually start doing it, keep reading. ->
By the end of this article, you’ll learn
- why saving money is important
- steps to take to take your savings account from tumbleweed city to more action than the Las Vegas strip
Let’s dive in!
Importance of savings: here are the top 10 reasons why you should save money:
- Less money stress
- Your health depends on it
- Saving money for the future you
- Better money decisions
- Savings equals freedom
- Do what you love
- Helping others
- Sets a good example for your child
- Protect yourself
Time to break these down:
1. Less money stress
Being broke is stressful! I’m not going to sit here and tell you how many people are broke in the U.S. (ahem, 60% of people don’t have $400 to cover an emergency). But I can tell you that when you have a cushion in your savings account, you won’t feel as much stress.
Car breaks down? Use your savings.
Get a killer toothache and need to head to the emergency dental clinic? Savings will help out there, too.
Grandma’s health is failing and you really feel like you should book last-minute flights across the country? You’ll feel less money stress about missing her last moments if you have the money sitting in your savings account for this exact reason.
Having to pay for something unexpected is stressful. But if you have a savings account for just those emergency expenses, it will help to cut down your stress in the middle of the situation.
2. Your health depends on it
There’s a huge connection between mental health and money. The importance of having a savings account and low (or no debt) is so big that it can affect your health.
You have this one life. This one shot. Do you really want to spend it stressed about money every single day?
Didn’t think so. Keep reading for how to turn things around.
3. Saving money for the future you
Okay so we’re really talking about the obvious here: the importance of saving for retirement. The younger you are and the more you save, the better your retirement game will be. Technically speaking anyhow.
Your money will have more time to accumulate and more time to make it’s own money babies. Who will then have more babies. Kind of like a money bunny situation. Those things multiply like crazy.
Of course, there’s no such thing as too old to start saving money. You’ll just have to work harder at it and get more intense with your savings for it to accumulate.
Save money for the future you – you’ll thank yourself later. 😉
4. Better money decisions
Having a savings account with a comfortable amount in it gives you confidence to make better money decisions. Picture this:
Your refrigerator breaks. Dang! Those things are expensive with a capital “E”
If you have zero money in savings, you’ll probably choose to borrow money from a friend, go into debt, or be without a refrigerator. Other crummy options: rent-to-own one and pay like a bazillion times more for it than the thing is worth. Or paycheck advance, which also charges you interest out the wazoo.
None of those are great, and I’m guessing you’d say that you’re not living your best life if you choose one of the above options.
However, if you had the money in a savings account, you could do your research to find the brand that’s going to last the longest and for the best price. Because you can pay for it with cash. (Let’s be real: who carries cash around anymore?) I mean you’ll pay with money from your account.
Point is, you’re not limited to a certain place to buy a new refrigerator. You can get whatever kick-ass fridge you want.
And not that I encourage it, but you could totally show it off to your bestie knowing you’re not suffering in debt.
The importance of a savings account is to help you make better money decisions.
5. Savings equals freedom
Money in the bank equals freedom.
Freedom to change your family’s story. The freedom to move to a new place, trendy area or safer part of town. Freedom to stay out of (or pay off) debt. And the freedom to make choices that make your heart sing!
If you start by growing a savings account, you’ll find that in time your money will help buy you the freedom to do what you love. Speaking of…
6. Do what you love
The importance of savings is to have the ability to do what you love.
Spend your money on things that you care about. Experiences you want to do. Things you want to buy. Spend your money on the things that make you happy.
My favorite reason to save money is to travel and explore this world! I can’t go on all the vacations I want without saving money first.
So, what do you love? Think about that and the ways a healthy savings account could help you achieve it.
And while not everything costs money, you’ll find that creating excess savings will allow you to invest in the things that ignite your soul.
If you just sang R-E-S-P-E-C-T in your head while reading that, let’s connect over on Instagram because you’re a sister from another mother. 🙂
Back to it…
When you save money, you have higher level of respect for yourself. You think about your future self and what you want in life. (This respect applies to your family too if you have kids.)
You respect the hours that you work, spending time away from friends, family and passions. So by saving a portion of that time (money), you’re building a higher level of self respect.
8. Helping others
When you save more money you have more money. I mean, that sounds obvious but just go with me here.
Having more money in the bank allows you to make smart money decisions.
This could include getting out of debt, less impulse spending, better money management, etc. So if you get to the point where you’re managing your money really well, you will have less monthly obligations (think: debt payments). You’ll have more to spend, save and give.
You can help others by giving to your local non-profit, helping a family member in need or giving really big tips at restaurants. It’s fun to surprise others with generosity and give back to causes you care about.
9. Setting a good example for your child
If you have kids, then your kids watch what you do. And you can show them the importance of saving money. They’ll catch on and start to see how positively impactful it is to save some money.
You’re setting an example for your kids and teaching them that saving money is important. They’ll establish good savings habits early.
Air high-five for awesome parenting!
Beyond that, by saving money you’re also setting an example to other friends, family, co-workers, etc. If you build your savings and start spending your money the way you want to, others will take notice.
Paid for a new bathroom remodel that looks gorgeous? Save enough to buy a car and pay for it outright without a loan?
Your friends will see a change in you. They’ll be asking you how you do it!
10. Protect yourself
And your family. Good savings habits allow you to save and pay for things you might not be doing now. Like life insurance. Or an umbrella insurance policy. Or basically covering yourself or your family from financial distress if something were to happen.
By building good savings habits, it makes it easier to protect yourself. Because saving money and taking a deeper look at your finances and your priorities can help you make the decision to invest in more insurance, if needed.
Okay, ready to get started?
So by this time you might be thinking… this sounds real nice but how can I actually do it?
If your expenses are already high, or you simply don’t feel like you have any extra to save, keep reading. ->
You might to need to make room in your spending habits to save the money that you want to save. You might even have debt to pay off, and that’s okay. It’s possible to save money and pay off debt at the same time.
Wait – why is saving money important to you?
Take a quick minute to look into your future. The future of you living your best life. What does your life look like? What’s your money situation?
Now, knowing that winning the lottery is not likely to happen (sorry!), it probably means you’ll need to start finding a way to save money. This might also mean earn more money to achieve the vision of you living your best life.
Okay so how do you do it? How do you actually start saving money?
Well here are 8 things that you can do right now to help you get started…
How to start saving money
1. Open up a savings account
Might seem basic, right? But here’s the deal – in order to save money and not get in the habit of spending it, you need to keep it separate. Get your savings money away from your spending money.
Separate them like the beginning of a 7th grade dance when the boys and girls want nothing to do with each other.
The importance of a savings account is to separate your money intentions. Lots of banks give you the opportunity to create a nickname in their mobile app or online banking. Have fun with it and call it something that will keep you motivated!
2. Find money to put in your savings account
Another obvious one, right? Well this one can be the most challenging. You need to find a way to have extra money that you’re not spending and save it.
Start small if you have to. $5 this week, $10 next. It all matters. Even if you’re buried in debt you need to find little windfalls to save. Check out these articles on specific ways to save money in your life:
3. Save money first, or you won’t do it
When I was a kid my parents annoyed me to my very core with our piggy bank rules. My siblings and I always (and I mean always) had to split every bit of money we received down the middle. Half went to savings. The other have we could spend.
I mean eyeroll! Imagine a 9-year old getting birthday money. $20 was awesome! Couldn’t do as much with $10.
Oh, and that $25 from my aunt at Christmastime was always a surprise! Until I realized I could only actually use $12.50 of it. I mean it was nice don’t get me wrong, but I didn’t really get why it was important to save when I was younger.
Like what’s the importance of saving money anyhow?
But now I get it.
If you wait until the end of the month (or pay period) to save money, it will never happen. Something else will always come up!
You have to save money first.
Contrary to the story above, I’m not saying you should save 50%, although that would be an incredible goal!
Usually the easiest way to save money first is by contributing to an employer-offered retirement plan. Your employer will take it out of your paycheck and put it in an investment for you.
If you’re not currently doing this, start small, like 1%. Then adjust to your new paycheck size and increase it to 3% in 3 months. Once you’ve adjusted to your income again, increase it by another 3% and so on until you’re at your goal.
Now that we’ve addressed the importance of saving for retirement, you’ve got other money goals too, right?!
To meet savings goals, put money in your savings account right when you get paid. Like the same day!
Then it’s out of sight in your regular account. And don’t give yourself the option to access it except to use it for whatever it was saved for!
So you could have a savings account for emergencies, another for a large expense coming up like a dream vacation, a different one for a crazy money goal like buying a new car with cash, or really anything else.
Open as many savings accounts as you need to meet your financial goals. Lots of banks and credit unions allow you to create sub-accounts, which is an easy way to track and manage your money.
4. Make it automatic
Okay so we already talked about the importance of saving first, but making it automatic is a huge part of reaching your savings goals. So just like a retirement savings account, you can have your employer deposit part of your paycheck in one account, and part of it in another account.
Let’s say you decide to save $100 per paycheck to take a family vacation to Hawaii. Set it up with your employer to transfer the first $100 into a separate savings account, and then the rest of your paycheck into your regular account.
You can also set up transfers automatically through your bank. Set up reoccurring transfers every week or month. Start with $20 and work your way up!
Let’s face it, with this crazy busy life you don’t need one more thing on your schedule. Making your savings automatic will ensure you save the money, honey!
5. Cut your expenses
The biggest and fastest way to start saving money is to cut your expenses. Write down everything you spend in a given month and figure out what you can cut to make room for savings.
And really ask yourself if you are spending your money on the things that matter most to you. I recommend to follow a value-based spending approach.
Stop going into your favorite store “just to look.”
Your cable, Netflix, Hulu and Roku subscriptions – make some cuts!
I’m not saying you’ll never be able to spend money. But I am saying that every dollar you spend today (on things that you know you don’t need) keeps you further from creating a savings account you’re proud of.
6. Bring in extra cash
When you understand why saving money is important, you’ll want to get money in your bank, pronto. So let’s get to it then!
Pick up a side job, sell your stuff, collect on previous debts, start a business – whatever you need to do to bring in some extra cash!
Get seriously inspired by these stories of 100 people who unexpectedly turned their side hustle into a serious business. Bet they’re saving loads of money today!
7. Get past your bestie’s doubts
Once you make the decision to grow your savings account, you’ll probably be changing your spending habits. After all, you can’t build up your savings (especially fast) if you don’t also address how you’re spending your money.
So you might get some crazy looks or comments from friends and family when you tell them what you’re doing.
One of my favorite questions: What if you die and have saved all this money and can’t use it?
My rebuttal: what if I don’t and run out?
Or another one: Isn’t a car loan just part of life?
Nope! It’s really not. Or at least it doesn’t have to be.
So just be prepared to stand behind your decision. Because this is your money and your life, after all!
8. Jump start your savings with these things
Also, just recently read this little gem that’s all about how saving little by little can have a profound difference in your life. It’s The Latte Factor by David Bach and it’s awesome (and super easy to read).
So, is saving money important to you?
If you’ve made it this far, I’m going to go with “yes” and hope I’m right.
Saving money can be hard. But it really doesn’t have to be. It’s a bunch of little decisions added up together that can make a big impact on your life.
You’ve got this! You get why saving money is important and you’re motivated to make it work.
Comment below with where you’ll start. And if you have a friend wondering about the importance of savings, share this with them!