Live for today and tomorrow will look after itself, is folly when applied to your finances. Many people perceive saving money for the future as desperately dull and associate it with depriving themselves in the present. With interest rates so low there is little benefit perceived to saving money which is likely to lose value due to inflation. However saving money is the key to financial freedom and by handling finances responsibly great savings can be made which can be put into saving plans for the future.
One can never foretell what the future will bring, be it ill health, unemployment, or some other factor which reduces your income and leaves you struggling to survive in the present. If the unforeseen happens when you have amassed debt though credit cards or loans then debt can become a vicious cycle which is it is seemingly impossible to escape from. Falling into debt through having inadequate savings to tide you over will result in your credit score plummeting and thus cost you more in interest payments.
Everyone should have an emergency fund set aside, in addition to saving for the future. When you decide how much you need your emergency fund to be then you have a target goal to reach, and after that additional savings can be made for the future. Many people live only one pay check away from being homeless and estimates vary in how much an emergency fund should hold, but aim for at least six months of all your monthly expenses.
Make a habit of always paying yourself first by directing a minimum of 10% of your salary into a savings account. Once it has grown to the level of your required emergency fund then you can use further savings to invest more strategically and invest in stocks or bonds. Peer-to-peer lending is a good choice to see a high-yield return on your investment whilst steady blue chip stocks provide a reliable dividend.
Savings made for your future can be used to pay off your mortgage early and thus save an exorbitant amount in interest charges paid to the mortgage lender. Having savings enables people to start a family without unduly worrying about additional costs. Saving for retirement may even enable you to enjoy an early retirement and have the chance to see the world when no longer servicing a mortgage.
Saving can become addictive when you see your pot of gold begin to grow and accumulate interest or dividends, and it is far more enjoyable receiving interest than paying it. The best time to start saving is with your very first pay check, but it is never too late to start. Living debt free with savings behind you for the future is the wisest way to handle your finances and enjoy a stress-free approach to your money.
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