5 Reasons Why You Should Save Money

5 Reasons Why You Should Save Money

 

Saving money is essential because it helps protects you in the event of potential financial emergencies. Saving money allows you to build your wealth, reduce financial stress, get out of debt, buy a home, and create an emergency fund. 

 

  1. Build Wealth

To build wealth, you must prioritize accumulating wealth. Saving money is key to your financial success. Saving money helps you develop good financial habits and increases the cash reserves you can invest. You can use a bank account to start saving money. Choose a bank that offers interest, so your money earns money. In addition, investing some of your savings will help you build long-term wealth. 

 

  1. Reduce Financial Stress

Life, in general, is stressful, and adding financial stress does not make life easy. Saving money will reduce stress in your life and your wallet. When you relieve financial strain, you can stop worrying about paying bills on time if you lose income or an unexpected expense like an auto repair. 

 

  1. Get Out of Debt

Did you know saving money can get you out of debt? Ironic, I know, but it’s true. Credit cards never get paid off if you use them for every emergency you may have. So before you start paying off your credit cards, put money into a reserve fund. The reserve fund will take the place of your credit cards. Use the reserve fund as your emergency fund. 

 

  1. Buy a Home

Buy a home! Buying a home will force you to save money for a down payment. A down payment on a home will need to be at least 5% of the price of the house. The bank will then consider loaning you the rest of the money you need. There are more components to purchasing a home that requires you to save money. Remember saving money will open doors to owning your own home. 

 

  1. Emergency Fund

Life happens whether it is a family member passing away, a flooded home due to weather, or has a car accident. Having an emergency fund, also known as a reserve fund, will allow you to handle the situations and not stress too much about money. In addition, saving money will prepare you for potential emergencies.

 

Build wealth by investing and collecting interest when you save money in your bank. Reduce your financial stress by saving money. You will be able to take comfort in knowing you have a saving in case of a rainy day. Build a reserve fund to use for emergencies rather than using your credit card. If you continue to use credit cards for emergencies, you will never get out of debt. Purchasing a home forces you to save money. The money you have saved, the better off you will be. Remember, accidents happen, and we can never predict when an accident occurs. An emergency fund will prevent the stress of money in an emergency. For more helpful money-saving tips, go to www.nancyopensdoors.com

Five Key Points to Consider Before Investing

Financial Fitness

Before you start saving money and putting it in an investment account check your finances. Doing a fitness check of your finances allows you to see what needs to be paid off before you start saving money. For example, it doesn’t make sense to invest your money if you haven’t paid off your credit card balances. You know you are ready to invest when your savings account totals up to be three to six months of living expenses, then you can start having fun with the stock market!

Risk Tolerance

Remember that different types of investments have different levels of risk. Having a savings account is a low risk but it also has a low rate of return. If you plan on diving into the mutual funds, know the risk level. Mutual funds spread the risk because multiple companies make up the mutual fund’s portfolio. If you plan on investing in individual companies, the risk is high, but you can be rewarded handsomely. At the end of the day, the risk will always be there. Choose the level of risk you can tolerate.

Goals

It is important to determine your goals before you start investing. Ask yourself why do I want to invest? How much do I plan on investing each month? What do I want my investment portfolio total to be at the end of one year, two years, even 10 years? Consider that your life does change and so will your goals. Your goals now will be different 10 years from now.

Diversification

Do you know the saying “don’t put all your eggs in one basket”? It applies to investment strategies. Do not put all your money in one investment. That one investment could tank and then what are you left with? Having a diverse portfolio allows you to have multiple sources on income.

Time and Knowledge

Take your time. Know what you are investing in. Learning about different investments takes time. If you do not have the time or patience, consider hiring a financial planner or adviser. Financial planners are paid on commission based on what you invest in. Remember, investing is a marathon so pace yourself.