While there are many factors that impact our financial well-being, one fundamental step is to develop a savings habit. Whether you choose to start saving $1 each week or $100 each month, building a consistent habit to save helps you improve your financial situation over time. As saving becomes an everyday part of your life, you will find over time that you have greater ability and capability to save more. And, the benefits are not just financial: having a savings can improve health, relationships, and opportunities that are available to you.
Peace of MindHigher stress means less sleep and more health issues. Financial stress is no exception, and it impacts each of us differently – emotionally, mentally, and even physically.
Most financial worry comes from not knowing how to afford something we need whether it is paying a bill next week, having money left over from the next paycheck, or even being able to afford saving up for something extraneous such as a family vacation. The truth is, whether we are starting out earning income, are living paycheck-to-paycheck, or we are more financially established, we have financial worries that can be reduced or even eliminated by having a savings plan in place.
Better Prepared for the UnexpectedThe unexpected is going to come up, and the best way to be prepared for it is to have an emergency savings. Typically, a good safety net consists of 3 – 6 months’ worth of living expenses. According to the National Financial Capability Study from FINRA, only 46% of Americans have set aside savings in case of an emergency. When the unexpected arises and we do not have a savings reserve to draw on, most will turn to credit cards or other debt to meet the unexpected expense, which just adds more to our financial stress.
You can build into your budget an allocated amount each month to save that works for you. Even if you start with a simple goal to save $10 from each paycheck, it will add up over time. And, as you get used to automatically including savings into your monthly expenses, you’ll find you can increase what you save over time.
More OptionsThe more you have saved aside, the more opportunities will be available to you to take. Whether it’s going back to school, making a career change, being ready for new home expenses, or simply wanting to take a spur-of-the-moment vacation, you’ll be able to consider options you couldn’t in the past. Just knowing that options are open to you adds to your peace of mind.
The next time you decide to sit down and think about building a savings, remember that it is an incredibly important and rewarding decision you are making: you are taking the first active step to securing a better future for yourself (and your family) financially, emotionally, mentally, and physically. And there are not many things that beat that feeling.