We all want to save money for when we need something extra. For many of us though that is little more than a pipe dream. But if you can put away a few pennies here and there, it could have a crucial role in making life easier. Moolr have taken a look at reasons to need savings.
There are few certainties in life, as you will know well. Having savings protects you from whatever lies ahead. A sudden, unexpected event does not have to throw your life into meltdown. An emergency fund insulates you from the things that are going on within the economy.
Linked to the above point, is the protection having savings to hand gives you. If you do lose your job, you need to have a backup plan to avoid falling into severe financial hardship. One way of avoiding this completely is by having savings that you can tap into. You can live off this money. For example, if you lost your job, if you have a two month emergency fund, this means for 8 weeks you will have enough cash to sustain yourself. It’s vital that you are able to pay your bills so that you can sustain your lifestyle. Savings will help you do this if something happens that affects you from being able to work effectively.
Calling your own shots, financially speaking, means having the freedom to make choices in your life separate from earning a pay cheque. It allows you to relax more, to make decisions that benefit you and make you happier. It removes the everyday worry that many of us have to deal with in our lives. Savings, or an emergency fund may mean being able to take a holiday whenever you want to. It could mean having the confidence change careers. Perhaps it could help you start your own business or invest in someone else’s. Or allow you to take on a lesser paying job that is more personally satisfying than financially beneficial. Or perhaps even retire earlier!
The word ‘liquidity’ is used a lot in finance. This means that it can be withdrawn at any time in cash. This is money that is in your savings account and current accounts. you can use this money as and when you need it, or use it to get out of debt by ridding yourself of existing finance.