“Don’t save what is left after spending; spend what is left after saving” is the advice given by the world’s most successful investor Warren Buffet. The importance of saving money cannot be overemphasised.
Saving is an excellent habit that you must inculcate early on in life to ensure your financial security.
Life is always throwing new challenges. While you cannot predict these, you can always prepare for them. Learning how to save money for any future contingencies is one of the best things you can do to ensure that you are able to tackle life’s many hurdles. Your savings can give you a sense of power and protection that can help you navigate through obstacles and emergencies and enjoy your life to the fullest.
Major reasons to save money include:
- To have an emergency fund to cover unexpected expenses such as a medical emergency or an unexpected expensive repair for your home or vehicle
- To have a retirement fund to take care of your day-to-day expenses after you retire
- To make investments that can earn an income that beats inflation
- To make a down payment for your home or other big purchases
- To pay for your children’s education and marriage
1. Understand Your Time Horizon
2. Determine Retirement Spending Needs
3. Calculate After-Tax Rate of Investment Returns
4. Assess Risk Tolerance vs. Investment Goals
5. Stay on Top of Estate Planning