Sarah and her husband Thomas had the perfect American dream but, Sarah had a humongous issue in her life that altered their American dream. She had a spending issue. Thomas tried to have a talk with her about this bad habit because it was starting to effect the funds in their joint account. Sarah tried working on her habit, but, nothing improved because she did not have a budget plan to start with.
So they came face to face with a horrible financial crisis. This is what will happen if you do not create better saving habits. Have you ever spent money on something you do not necessarily need? Well if you thought about it, there are a lot of ways you can save money by just cutting down on the little things you spend. There is a plethora of others who could be going through the same thing.
I believe everyone should attend a class that gives you tips on how to save money and what great out comes it gives you. Budgets are an important part of personal financial responsibility because it helps control your spending. In the words of James Kendrick “saving money brings significant benefits to the financial status of a person and it is helpful to reduce personal economic risk in life”. Having budgets can also help you stop living paycheck to paycheck.
The more money you make, the more you’ll spend, and you will save nothing. Before you start to save you should go over a good plan with your bank or a good trusted person you know who has an amazing budgeting plan. A person has to find a certain level of living that they’re comfortable with then work on earning more without increasing their expenses. Creating better saving habits will help you out in the future.
In addition, if a person starts saving in their early twenty’s they would have a better life because they started at a younger age and they will also be able to retire early. There are many reasons why saving money is important. Such as medical emergencies, retirement, job or income loss, and even for education purposes. These are very important to have money saved up for because you never know what will happen.
Saving money can really help improve your lifestyle. Being able to retire early can also stop future depression, reducing stress, and help you live longer. In the words of senior research scholar Jeffery Arnnet, “ ‘If someone has been in a demanding profession, I can imagine retirement could come as a relief to someone”. Putting money to to side for early retirement in your twenty’s would be the best age to start because the early you start the more money you are able to save.
Start with your job asking if they have a 401(k) account and be sure to put money in it. It does not have to be much but enough to get your savings started. Doing this at an earlier advance you will look back and be overjoyed you did this. It can also benefit you better by becoming more confident with yourself because you will live more comfortably knowing you have enough saved up. A person will find better compatible social circles, meeting others who have the same values and goals and are interested in the same things.
Saving for a medical emergency is very important because your health should be your top priority for living. If you have no money for an emergency fund you are basically showing you do not care about your health or your families’ health. By setting aside money as part of your monthly budget to start an emergency fund, you could have the ability to quickly pay down medical bill debts.
Medical providers may be more willing to negotiate payment plans with you if you are able to pay some or all of your bills up front. Going without an emergency fund is like operating without any savings. Your emergency fund can protect you from all of the unexpected expenses you may encounter whether big or small. This is why it is a major principal to have a savings fun for medical emergencies.
Another significant reason a person should start a savings account is if they become laid off or their job docks their pay. This is where living from paycheck to paycheck come in. Living this way is not the best way to go because you are opening up a whole bucket of financial issues in your life. It is best to make sure you have a rainy day’s fund that is more than six months worth of expenses.
Which is money you do not touch Incase something like losing your job happens. The unemployment rate is increasingly high; it could take months for a person to find their next job. Which is why it is key to keep a rainy days or emergency fund around to be certain you have money to live off of for the next few months an individual is jobless. However, doing so this when budgeting comes in.
Budgeting is also a huge part in saving especially once a person is out of job. Making sure you keep up with your budget plan to have enough to live off but keeping money still around to have a good savings.The best thing to do is only getting the necessities and using little as possible. Doing this will help you figure out how much more money you’ll need from other sources, like savings, for necessities and how many nonessential costs you’ll need to cut.
A recent study by Rachel Gillet argues that children from low or moderate income families, who have a savings account for college, are three times more likely to go to college, and four times more likely to graduate college. This is because they would have more support and the financial funds to attend a college or university without having to undergo the pressure of taking out so many loans in their name. Doing so, this will prevent them from future debt problems and personal issues in their life such as suffering with depression from trying to pay back those debts.
Parents should often open accounts for their children, to help them learn about saving for the future and managing their money. Financial skills are important in life and getting kids started early with good financial habits and savings can make a big impact on their financial futures by setting savings goals. A child will begin to understand that different things have different costs and through saving to reach a certain financial goal, they come to understand the basics of income and expenses. A basic savings account also teaches that investing smartly and consistently can grow your money.
Now that you know the importance of saving and budgeting your money here is what will happen if you do not follow the importance of those steps. When you do not have a budget, it’s far too easy to spend more than what is reasonable or even more than you bring home each week and once the debt spiral takes hold and you start paying interest, it becomes even harder to dig your way out.
If a surprise bill just so happens to hit when your account runs low, well, you’re automatically behind for the month, or forced to tap your emergency fund or even go into debt for something you should have seen coming. Being able to save money can often be very tempting for us, because there is so many things that we have to get for ourselves, whether it is for clothes, food or entertainment. But, it’s all about having the strength to be able to put your responsibilities before your wants. We all can admit to giving in to spending important money that isn’t meant to be spent on things we don’t necessarily need.
A great way on how I taught myself to save money is pretty simple. I record all of the important things that need to get paid for, such as gas for my vehicle, my payments for school, food for myself and other bills that need to get taken care of. I, then, get all of the things that I have on my list of wants, I get a couple of those things, if it isn’t too expensive, and then I take the remaining amount of money that I have and place it into my savings so that way I can keep that money for the next billing cycle.
I found this way very helpful for me, because I saw the importance of saving and having your bills paid and all your necessities taken care of is way more important than having all of your wants taken care of. Also, I realized that a part of growing up is learning how to manage money, simply because I will eventually have to venture out on my own without my parents, so being able to manage my money and learn how to be fiscally responsible is now very important to me. I’d rather be bored with all of my responsibilities taken care of instead of going broke and spending my money irresponsibly on things that can wait to be purchased.