Why Is Saving Money Necessary
As you start to set short and long-term goals, you will find that money is one of the needed components to accomplish some of your goals. For example, your savings could be designated for:
College tuition
Purchasing a car
Home improvement
Buying or renting a home
Vacations or luxuries
Retirement savings
Each of the items mentioned above can be very fun and exciting reasons to save money. With some financial discipline, you will be able to achieve those goals. However, let’s not forget about the necessity of having an emergency savings account.
What if?
In life, it is SO easy to focus on achieving big financial goals that help you obtain certain tangible items such as a vehicle or a home, that we tend to forget about the importance of the “What if…?” Establishing an emergency savings account needs to be a priority. The “What if…?” can be for numerous types of emergencies, unplanned and unforeseen circumstances can become financially costly situations.
What will you do if one of the following happens?
Job loss
How will you handle it if you lose your job, or you receive a pay reduction?
Vehicle repairs
How will you afford to make major vehicle repairs if the need arises?
Injury or illness
If you are sick and miss a few weeks of work with zero pay, it will hurt! You’ll lose income and need to pay medical expenses.
Home repairs
What if you need home repairs because your air conditioning unit died in the middle of summer?
Those are just four of the major financial curveballs that life throws our way. But how do we hit those curveballs out of the park when they occur? Most financial experts recommend that you have three to six months of your monthly living expenses in your emergency savings account.
Does your savings account suddenly have enough money because you know how much you need? Absolutely not! However, with careful planning, budgeting, and financial discipline, it will happen and the next few pages will teach you more on this subject.