8 reasons to start saving money now –
What we're covering..
You may have been told that you need to “save save save” in order to be successful. 🏅
Saving money can be really difficult – it takes a lot of patience and self-control. 🧘
But why should you bother? 🤷♀️
Why is saving money important?
Today we’re talking about why it’s important to save money, and why you should start saving now. 💰
Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.
1. Emergencies 🚑
Financial emergencies are a lot more common than you think. 🔥🚒
One minute your bank account seems full – the next you find yourself needing money for things like:
- Unexpected bills 🧾
- Car repairs 🚗
- Pet veterinary bills 🐶
- Increased shop prices 🏷️
- Phone repairs 📱
- Broken fridges/freezers/washing machines 🔧
- Home repairs 🏡
Not only are these events really stressful –
It makes it so much worse when you have to worry about scraping the money together to cover those costs. 😟💸
Having an emergency fund is probably the most important step towards getting in control of your finances. 👣
Having a pile of savings set aside gives you: 🗻💰
- lower likelihood that you need to borrow money in an emergency 💳🧯
- peace of mind knowing that you have something in the bank to cover you 🧘☔
Emergency savings give you a great safety net. 🥅
I mean who here wants to lie awake at night, worrying about their washing machine breaking? 🤔💭🧽
How much money should I save for emergencies?💸
The 3 month rule 3️⃣📆
Some financial experts recommend that you need 3 months’ worth of your typical income saved away for emergencies.
This means that if you make £2,000 a month, some experts think that you should have £6,000 saved away for emergencies. 💰
This means that if you lost your job or income, you would have 3 months to fix it before it becomes a bigger problem! 🛠️
If your job or income is less stable, you may want to consider saving more e.g. 6 months’ worth of income for peace of mind.⚖️
Did you know?
In June 2021, Yorkshire Building Society found that 1 in 5 UK adults have less than £100 in savings.
If you have less than £100 in savings, it’s a great time to start saving! 🐽
Try to commit to saving a regular amount every month for emergencies. 📆
If it’s a struggle to get money saved quickly, saving 10% of your income might be an easier start. –
If you make £2,000 a month, you could save £200 a month, and reach your £6,000 emergency savings goal in 2.5 years. 🪜
Having an emergency fund can help you to feel more prepared for the future and financially comfortable.
It could be a good idea to keep your emergency savings in an easy to access, separate savings account, to avoid accidentally spending them. 🏦💸
2. Avoiding debt 🌪️
If you haven’t got an emergency savings safety net, you may have to borrow money to cover unexpected emergencies. 💳
This could be from family or friends, but very often people borrow from businesses with things like credit cards, payday loans, or personal loans. 💸
Having lots of debts to juggle can be one of the most difficult and stressful challenges to navigate when managing your money. It can make budgeting feel very difficult to manage and out of control. 🤹♀️
Some of the potential risks if you can’t repay the money include:
- Losing money
- Falling into a debt spiral
- Your bills increasing
- Getting evicted (having to leave your home)
- Your credit rating going down (What is a credit rating?) – (making it more difficult for you to borrow money in the future)
- Getting taken to court to make you repay the money
- Damaging your relationships with friends/family
- Getting a court fine
- Bailiffs coming to your home and selling your personal possessions to pay off the loan
- Money being taken from your earnings
- Going to prison
- Being made bankrupt
- Some of your utilities like gas/electric could get cut off
Having a good pot of savings can help you to avoid debt problems. 💰
You can get free debt help and advice in the UK from:
- Citizens Advice Bureau – https://www.citizensadvice.org.uk/ – “The Citizens Advice Bureau give people the knowledge and confidence they need to find their way forward – whoever they are, and whatever their problem. Their network of charities offers confidential advice online, over the phone, and in person, for free.”
- Stepchange – https://www.stepchange.org/ – “Contact the UK’s leading debt charity to get expert debt advice and fee-free debt management to help you tackle your debts.”
3. Financial freedom 🏖️
Having a big pile of money to fall back on can give you a lot of freedom. 🏞️
Is there a dream job you would love to do, but you’re worried you might not make money straight away? 👩🎨
Lots of people end up stuck in jobs they hate, because they don’t have the savings to let them take risks, and try a job that they enjoy. 💼💖
Having money in savings gives you choices and freedom to try out things, without having to worry about losing income too much.
Ever considered investing, but worried about losing money? 📉
If you have savings, you might be able to take a bit more risk with your money and invest, because you have savings to fall back on. 🛏️
4. Peace of mind 🧘
Money stress can be one of the worst feelings to ever experience. 😢
Worrying about how you’re going to pay for food, shelter, and family can be particularly painful.
Experiencing money issues/stress can create:
- sleep problems,
- low confidence,
- low energy levels,
- feelings of anger, shame, and fear,
- increased risk of depression and anxiety.
Having savings helps to reduce money stress, giving you peace of mind that you have a safety net for emergencies. 🥅🛀
5. Protection for the future 🦾
Nobody can predict the future, and but having savings gives you financial protection, no matter what happens. 🔮
- Lose a job/income 💼
- Get old and be unable to work 🧓
- Become sick 🤒
All situations that might be made more comfortable by having some spare cash.
The more money you save, the more financial protection you have for the future. ⛑️
6. Helping others 💞
Having savings doesn’t just help you, it can also let you help others.
Savings can enable you to:
- Improve your relationships – you won’t need to borrow money off friends/family, which can damage relationships 🩹
- Give friends/family peace of mind that you can take care of yourself financially 😊
- Support family/friends financially 🤝
- Donate to charity and things that you care about 🌎
7. Buying expensive things 🚗
Have you seen the price tags on things like:
- Washing machines
- Mobile phones?
They cost a lot! 🏷️
A lot of people have to borrow money to be able to afford them. 💳
When you borrow money, you usually have to pay extra money (interest) to say thank you (What is interest?)
This can make expensive things, even more expensive! 💰
Buying expensive things is actually cheaper when you have enough savings to pay, because you don’t have to borrow money to buy things!
If you can afford to buy expensive things without borrowing money, you spend less money in the long run. 🏃♀️
8. Investments 📈
The more money you have saved, less risky it can make investing, because you have money to fall back on. 🥅
If you put £1,000 into investments and have no savings, you’ve basically invested all of your money. – If you investments go wrong, you could lose 100% of your money! 😨
If you put £1,000 into investments and had £9,000 in savings, you’ve only invested 10% of your money. If your investments go wrong, you’ll still have 90% of your money left! 🙌
Having savings gives you more security when you make investments. 🔐
So that’s it!
If you haven’t started saving, you should consider it because savings:
- Can help cover emergencies 🚒
- Help you to avoid getting into debt 🌪️
- Offer financial freedom 🏖️
- Give peace of mind 🧘
- Offer protection for the future 🦾
- Help you to help others 💞
- Make expensive things a bit less expensive (when you don’t have to borrow money!)🚗
- Give you more security when you make investments 📈
Hopefully you’re feeling more confident and motivated about saving. 🙌
If you know any friends or family members who might benefit from learning about why saving money is important, share this post with them!
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