If we acquire the habit of saving money this will bring us a lot of advantages, but this is not easy. Most of us know that it is necessary to save, but we get carried away by the impulses of purchase and we do not make a good administration of the money, this can affect our future.
What is saving?
Saving is money that is saved in the present for future use. Another definition would be “Economize part of the expenses not necessary to use that money in goals that we want to achieve in the future.”
What are the advantages of saving money?
Possibility of enjoying a healthy financial future
What do we mean by this? Of course, people who save from a young age can aspire to a better financial future. Although saving requires short-term sacrifices, after several years of savings in a retirement plan or other investments, we can enjoy better conditions in the future.
Reach our plans and goals
Reaching our plans and goals One of the main advantages of saving is that it allows us to carry out many of our plans and achieve our goals. When we want to acquire certain material goods whose cost is high, such as a house or a car, it is always necessary to save.
Fixed expenses vs. extraordinary expenses
Although the earnings we receive from our work allow us to pay the fixed and daily expenses (bills, food, rent …). It is the money saved that allows us to meet the extraordinary expenses that we had not taken into account, so we can pay these expenses without borrowing money or run out of liquidity.
Protection against decreased earnings
It is also very important to save, in case for some reason, our earnings are diminished. As for example, if we run out of work, we see our workday reduced or if we cannot work due to disability.
Great discipline that can help us achieve other goals
As we know, it is not always so easy to save money, but the habit of saving encourages self-discipline, because we do not make some current expenses to have better benefits in the future. This requires a large dose of will and these will help us achieve other personal goals.
Possibility of making smart investments that increase our assets
If we have years with firm savings habits, we will have a good amount of money that will allow us to allocate it to investments that increase our assets. But beware! We must check well where we invest our money, to avoid part or all of our assets in a rash investment or a bad investment.
There is no need to borrow
We all know that financial institutions offer multiple alternatives to buy now and pay later, the so-called credits. But one of the great benefits of saving is that we can pay in cash, therefore, we have no need to borrow to achieve our goals.
Have you heard of passive income?
A great objective would be to accumulate capital until your investments generate more income for you than you earn from your work, the so-called passive income. This is not easy! But if you get it, you can start retiring from your regular job and spend your time managing these assets.