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The benefits of saving money are often overlooked, as most people put their focus on figuring out how to make more money.
While it is great to have a high income, it is just as important, if not more important to save money.
In this post, I’ll walk you through 17 important benefits of saving money.
By the end, you’ll see that you need to start paying attention to your savings rate and not just how much you earn.
17 Powerful Benefits Of Saving Money
#1. Peace Of Mind
One benefit of saving money is peace of mind from a financial emergency.
When you have savings, it takes the stress out of your life knowing that if anything happens, you’ll be OK.
The stress that can come from unexpected expenses can be overwhelming to many.
To combat this, you need to build an emergency fund of 6 to 12 months’ worth of expenses.
Some financial experts recommend as little as 3 months in savings, but the more you have, the less likely you will experience financial stress.
Look at it this way.
Let’s say you only have 3 months’ worth of expenses in savings and you experience a job loss.
You know you have to find a job within 3 months or your will run out of cash.
But if you have 12 months of monthly bills saved in case of an emergency, you won’t feel rushed to find a new job.
This isn’t to say you can take your time, but you won’t feel like you need to take a position just to start bringing a paycheck back in.
Where should you keep your emergency savings?
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You can use a regular savings account at your local bank or a high-yield savings account at an online bank.
I prefer online banking since they pay higher interest rates, which means your money will grow faster.
#2. Improved Health
Studies show that people with money tend to lead healthier lifestyles.
Not only can they more easily afford a gym membership or to play sports or activities they love, but they experience less stress as well.
And high levels of stress can lead to heart disease, cancer, anxiety, and fatigue to name a few.
Not having to worry about how you are going to pay this month’s mortgage is a huge benefit.
If you want to live a healthier life, then make it a point to create savings goals and save as much as you can.
#3. Better Marriage
One of the biggest reasons for fights and unhappy marriages is from money problems.
If you spend too much, or you are saving too much or too little, money can lead to the end of a marriage.
In fact, studies show money issues lead to divorce 22% of the time.
But just as money can pull you apart, it can also bring you together.
When you have common financial goals, this gives you reasons to save.
And as you achieve these goals together, they will bring you closer together.
#4. Financial Security
When you are saving money, you also have financial security.
No one knows what the future holds.
Maybe your future self will develop cancer or you will get disabled, unable to work.
Or maybe you want to be around for your children more as they grow.
Whatever the reason, having the money in the bank or in investments gives you the security to know that no matter what life throws at you in the long term, you can handle it.
The last thing you want is to become a financial burden on your family.
#5. Take Advantage Of Compound Interest
Another reason to save money is compound interest.
It allows you to earn interest on your money, plus interest that is accruing but not yet credited to you.
The result of this is that you can stop saving money and your money will still grow for you every month.
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So if you have made it a habit to save money and then something happens and you have to stop saving for a few months, you can do so without harm.
Your money will continue earning interest and growing until you can start saving again.
#6. More Opportunities In Life
When you have money in savings, you have more options in life.
You aren’t stuck in a job you hate.
You could work a lower paying job you enjoy and still get by.
Or you could take your dream job in another part of the country or the world.
Maybe your spouse has always wanted to be a stay at home parent.
With money in the bank, this is possible.
Or maybe the housing market crashes and you could get a great house at an amazing price.
When you have savings, it becomes possible to buy the house.
The point is, the more money you have, the more freedom you have in every area of your life.
So make it a point to put money away and you too can experience these joys too.
#7. Ability To Travel
Perhaps the biggest benefit of having money saved is being able to travel.
It doesn’t matter if you want to take a weekend trip or go on an around-the-world adventure, it will be possible with your money saved up.
Traveling benefits everyone and anyone who does it has reported benefits they didn’t expect from their travels.
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It benefits you physically, mentally, emotionally and spiritually.
And if traveling is important to you, you can save money so you can continually travel every year too.
So make it a point to start saving money so that you too can travel the world.
#8. Guilt Free Fun
One of the best reasons to save is to have extra fun money.
This fun money can be spent guilt-free on anything you want, as long as you can afford it.
So if you want to splurge on a sporting event or concert, you can do it without worrying about your finances.
#9. Comfortable Retirement
Saving a little bit of money every month affords you the chance to retire one day.
No longer do you have to go into work if you don’t want to.
You can spend your days doing whatever you want to do.
While you can still retire without saving money and rely on Social Security or a pension, these income streams won’t allow you to live life comfortably.
This is only possible if you put money aside.
#10. Financial Freedom
One of the best reasons to start saving today is the possibility of early retirement.
If you make it a point to budget your money so that you can save 40% or more of your salary each month, you can likely retire much sooner than you think is possible.
While it isn’t easy to keep your living expenses low so that you can save this amount of money, the good news is even if you can’t sustain this savings rate for a long period of time, even a short burst will be beneficial.
This all goes back to the idea of compound interest from above.
The more money you have saved, the more it can grow for you.
So make it a point to spend as little as you can but still enjoy life.
While you might not be able to retire at age 40, you might be able to call it quits when you reach 50 years old.
#11. Improve Yourself
Improving yourself should be at the top of everyone’s list.
Whether it is getting more education, learning new cultures or a different language through travel, or simply reading more books, having money saved is a requirement.
And when you work to improve yourself, you also improve your relationships with others too.
The easiest way to know how spending money to improve yourself is to know what you value.
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When you know what things or experiences make you happiest, you can make a point to spend money on these things.
And you can start saving too so you have cash available.
This cycle feeds upon itself and you become a happier, healthier person.
#12. Buy A House
We all know a house costs a lot of money.
And while you won’t be saving enough money to pay for a house in cash, you can have a healthy down payment.
This down payment provides many benefits.
First, you can afford a more expensive house because your loan will be smaller.
Next, if you don’t buy a more expensive house, your mortgage will be small enough that you can ideally pay your house off early.
Also, by putting down a sizeable down payment, you avoid private mortgage insurance and get the best interest rate possible.
Finally, home ownership allows you to boost your savings as well.
Once you pay off your mortgage, you have a valuable asset you can borrow from or sell for a windfall of cash.
#13. Afford Large Purchases
There are many big-ticket items in life.
Buying a new car, needing a new washer or dryer, or a new oven are just some examples.
Without any cash saved, you are going to have to finance the big purchases with your credit card.
And chances are you won’t be able to pay the balance in full when the statement comes, so you will find yourself in credit card debt.
Now you have one more bill every month and more stress in life.
By creating a savings plan and putting money away each month for these purchases, you avoid the headaches that come with not having money saved.
So take the time to figure out some of the large purchases you need to make or will want to make and set up a savings goal to ensure you have the money for them.
Depending on when you need to replace items, you will be setting up both short-term goals and long-term goals.
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Then put money towards each month.
#14. Take Calculated Risks
Related to the idea about having more opportunities comes the ability to take calculated risks in life.
Maybe you have the desire to start your own business.
If cash is tight, it might not be a possibility for you to quit your job and pursue your dream.
But you have an ample savings fund, this is possible.
This happened to me.
I was laid off out of the blue one day.
While I had never thought of going into business for myself, my side hustle was enjoyable.
This was my chance to see if I could turn it into a career.
But the only reason I could do this was because I made it a point to save money on a regular basis.
I had money to cover my monthly bills so I could take this risk.
Taking calculated risks doesn’t end with starting your own business.
It could mean moving to another state or scaling back to help with an elderly parent.
#15. Financially Help Your Children
As your children grow, they will experience life events.
And if you made it a point of managing finances wisely, you can help your loved ones out by avoiding or limiting financial stress.
Think about how great it would be to help them financially with their master’s degree or their post secondary education.
Or help them by putting money towards their wedding, or leave them money so they could retire early.
All of these are possible when you make saving money a priority in life.
#16. Help Those In Need
One of the benefits to saving money is that when you do have some extra cash, you can give it away.
This could be donating to your church or a local charity.
It could also be providing assistance for someone who has fallen on hard times and needs help buying groceries or paying their rent until they are back on their feet again.
Or it could be as simple as paying for someone’s order when you eat out, leaving a large tip for a server, or even paying for a family’s Christmas gifts.
#17. Leave A Legacy
One of the benefits to saving money is that you can leave a legacy for your family.
This isn’t just about leaving them an inheritance, but rather teaching them how valuable it is to save and plan for their future.
You might also want to consider putting some cash aside so they will be financially secure if something happens to you whether through illness or death.
Alternatively, you can leave a portion of your estate for your favorite charity or cause as well.
While make donations while you are alive is great, being able to leave a larger amount is something the charity will forever be grateful for.
The Power Of Your Savings Rate
Why is it so important to save as much money as you can?
The reason is compound interest.
When you have your cash in a savings account or invested in the stock market, it earns interest and grows over time.
And the more you can save or invest early in life, the more interest will work in your favor.
For example, let’s say you are able to save $50,000 by the time you are age 25.
You add no more money to this amount until you are age 50 and the money earns 8% annually.
When you hit 50 years old, you have close to $342,000.
But let’s say at age 35 you have nothing saved but start saving $500 a month until age 50 and this money earns 10% annually.
When you hit age 50, you have close to $210,000 in savings.
The point is, you need to make sure you save as much as you can, as early as you can.
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In the first example, you saved a total of $50,000 and in the second example you saved $90,000.
Even with saving $40,000 more and earning a higher interest rate you still end up with less in savings because of time.
In the first example, your money had more time to compound, 10 more years to be exact.
Make sure you make saving money a priority in your life.
Even if you only start out with a small amount.
It will make a huge difference in your financial situation down the road.
Saving With Automatic Transfers
Now that you know why to save and the importance of starting early, how do you make it as easy as possible?
The first step is to start a budget.
This will allow you to see how much money you can comfortably set aside each month for savings.
Or it will show you that you are spending too much and need to make some adjustments in life by reducing some of your monthly expenses.
I recommend you review you expenses even if you are able to save money each month.
This is because I am certain there are easy things you can do to reduce your spending more, freeing up more money to save.
Once you know how much you can save, you need to set up separate savings accounts for all of your goals.
This will make it easier to see how much money you have for each goal.
Finally, set up automatic transfers from checking to savings.
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The reason for this step is that a lot of people plan to save at the end of the month, but never have anything to save, or they forget.
By automating this part, you never have to remember to save money and you do it first.
And most banks make setting up auto transfers easy.
If you follow these couple of steps, you will be on your way to saving money and enjoying all of the benefits that having money in savings offers you.
There are 17 benefits of saving money.
By taking the time to create a savings plan and following through with it, you can secure your financial future, limit stress, improve your health, and have more opportunities in life.
And while saving might seem like a daunting task, especially if you have been living paycheck-to-paycheck for years, by making small changes in your life today, tomorrow will be much brighter.
So take the steps to budget your money so you can put something into savings or invest something every month.
Don’t worry about the amount at first, just make saving a habit.