If you are meeting your monthly financial obligations and have a little extra, why save? Why worry about eliminating debt?
There are many reasons to answer the question "Why Save".
It's always best to pay cash for big ticket items instead of using plastic. Remember, using plastic is trusting that you will continue to make the money you make and be able to meet your monthly payments – you are borrowing from your future. Saving is a way to start eliminating debt and begin the road to debt free living.
Save for a Car
Eventually, everyone's car will wear out and you will need another. Whether it be a used car or a new car, paying cash gives you more power to negotiate. When you use cash to buy it, you will save money on a car.
Save for Emergencies
It's a fact of life, there will always
be unexpected expenses. I label these as emergencies if they are
unexpected and I hadn't planned for them. The emergency could be an
unexpected car repair, an unexpected trip to the doctor or an
unexpected vet bill for your pet.
The ideal emergency fund should be six months of expenses.
In addition to an emergency fund, make sure you know the options for your insurance plan so you can effectively navigate the unexpected financial hits in life.
Save for Education
Have money set aside for education. You could have an unexpected layoff and it would be the perfect opportunity for you to return to school to learn more about your trade, or learn a new trade that's in more demand than your current. If you have children, saving for college is an absolute must. If you wait until the last minute, you'll be shocked when you see the price tag per semester.
Save for Vacations
Everyone wants to go on vacation but not everyone has the money. Why save for it?
People choose to finance their vacation and pay for it for several years. This is a very bad idea. If you want to go on an exotic vacation, save for it. It will mean so much more to you if you've put forth the effort in saving. Paying for a vacation after you took it just makes you need another vacation to alleviate the stress of paying for the first.
Save for Retirement
A fact of life is all of us will reach the age of retirement. So what, why save for it, I'm young?
The sooner you realize this you will reach the age of retirement and start saving, the less you will have to save in the future. As you contribute over time you earn more interest on the money you have. You should contribute at least the minimum required for your employer's match. Eventually you need to work up to contribute 10 to 15 percent of your gross income. When you reach retirement age, there will be no question on whether or not you have enough money to retire. The question will be do you want to retire or not - a lot less stress than scrambling for money to retire.