The average millennial spends $48000 in yearly expenditures (a whopping $4000 a month) and only has a total networth of $10 000 by age 25.This is a dangerous cycle.
Today I am going to present the 4 reasons I, personally, choose to save in hopes that you’ll come to that decision too.
1. Increased freedom to make better life decisions
When you have money saved you can, take time off work for your mental/physical health, choose a more enjoyable job that might pay less, or simply go on a wanted vacation. These options, which may have been previously off the table if you have no savings, become a possibility when you have money saved up.
2. Emergency expenses
Unexpected life events happen. It’s inevitable. To avoid adding financial stress to an already stressful situation such as a medical emergency, car crash/breakdown or losing your job – having savings will prevent you from losing sleep and needing to take on a high interest loan. Fingers crossed you never find yourself in any situation like this but if you do I’m sure you’ll be forever grateful you saved. It’s general best practice to save 3-6 months in living expenses for your emergency fund in an easily accessible account.
Once you are in a good spot (all debt paid off, 6-month emergency fund built) it is time to look into the benefits of investing and the magical concept of compound interest. There is no better feeling than seeing your hard earned money work for you.
4. Financial independence
Imagine not being tied down to your job and having the ability to go traveling anytime you want or spending time on your hobbies without worrying about needing to go into work the next morning. This can become a reality much sooner than you might think if you are disciplined enough to save yourself a substantial nest egg.
Hopefully the above has sparked some thought for the reasons you want to save, and in turn motivate you to start this life altering habit. Now that I’ve convinced you to start saving it is time to start establishing saving as a habit, creating a budget of your monthly expenses that you will stick to and setting aside as much as you possibly can from every paycheck!
**This is a guest post by Connor Chew for The Finance Project.
Photo by Charles Deluvio on Unsplash.