10 Reasons why it's a Good Idea to Save Your Money

10 Reasons why it's a Good Idea to Save Your Money

Written by Caitlin Wood
Last Updated October 20, 2020

There are endless things to spend your hard earned money on, from monthly bills to food and entertainment it can be really hard to find even a small amount of money to put aside every month. Credit cards, debit cards and cash advances all make it very easy to access and then of course spend your money, when it’s that easy to get, it’s also that easy to throw it away. Even if you don’t have the cash on hand you definitely have a credit card which is one of the top reasons why people find it hard to save. It’s hard to take responsibility for your money and spending habits but we’ve compiled a list of the top 10 reasons why it’s both important and a good idea to save your money.

1. Get rich

Everyone wants to be rich, not having to worry about money and being able to buy whatever you want is a huge goal for a lot of people. Well unfortunately it’s not that easy and a lot of rich people started from the bottom moving their way up by working hard and by saving their money. That’s right you need to have money to make money, so start saving now and make it a regular thing. Save a certain amount every week or once a month or every time you get paid. That way if an opportunity comes up to invest in something you’ll have the money and the potential to make more.

2. Stop paying so much interest

Are you ones of those people who always puts everything on their credit card because you don’t have the cash to pay for it up front? If you are and you also only pay the minimum payment on your credit card every month you could be paying up to 50% more for each item you charge to your card. Here’s how saving your money will help you with saving even more in the long run. If you have a saving account that has a significant amount of money in it you won’t have to pay for everything with your credit card and therefore won’t have to pay interest. You’ll be able to afford all of the necessities by paying for them with the money you have saved instead of your credit card.

3. Buy a Home

Buying a home is very expensive, payments, bills and unexpected expenses are inevitable. To even get a mortgage you have to have enough money saved up to make a down payment which is usually 5% of the price of the house. It’s important that you have more money saved than you think you’ll need, that way if there are any unforeseen costs you won’t be caught off guard. Saving enough money for a down payment can take several years so it’s a good idea to start right away even if you don’t want to buy a house right now.

4. Buy a Car

Much like buying a house, buying a car is a huge investment that needs to be planned and saved for in advance. In order to get a car loan you need a down payment and you also need to be able to make the monthly payments which might be hard to do if you don’t have any money saved. Having a substantial savings before you decide to buy a car will allow you get the car you want without any hassle and you’ll be prepared to pay the monthly payments.

5. Be Debt Free

If you have any kind of debt, student loans, credit cards, private loans or even a mortgage then saving money needs to be a priority for you. Your debt won’t magically go away and it’s easy to simply keep making the minimum payments without realizing that the interest on some of your debts will make it almost impossible to pay off completely. Start saving now, stop using your credit card to buy things you can’t afford and make larger and more frequent payments towards your debts.

6. Life Expenses

There are endless small life expenses that when all added up can end up costing us a lot. Weddings, baby shower gifts, a last minute vacation opportunity, broken appliances and home repairs are all things that can end up costing a lot of money and potentially put you into debt. But if you put aside a little bit of money for those random and miscellaneous expenses then you won’t have to stress about them when they happen.

7. Unforeseen Expenses

Unforeseen expenses always seem to be very expensive and they always pop up at the worst possible time. Major car or home repairs can sometimes cost thousands of dollars and if you don’t have any money saved they can be hard to afford. Putting these kinds of expenses on your credit card will only cause more issues especially when the interest starts to add up. But if you have some money saved then these kinds of issues will be much less stressful to deal with.

8. Emergencies

While planning for the worse is never something we like to do it is important to have some money saved in case of an emergency. The thing about emergencies is that we never know when they’ll happen so being prepared just in case is the only thing we can do. Funerals, car accidents and severe weather emergencies can all happen without any warning and cost a lot. Having money put aside for these emergencies will help you cope will the aftermath and reduce the risk of going into debt.

9. Job loss or injury

While most people like to think that they will never lose their job or get so hurt that they’re unable to work it is still possible that these things might happen. But do you have enough money saved to tie you over until you are able to either get Employment Insurance or a new job? Sometimes our luck runs out so we need to be prepared to deal with these kinds of situations if and when they happen.

10. Live a less stressful life

Always being stressed about money is hard on both your mental and physical health. Living from paycheque to paycheque without any concern for the future will only lead to financial issues and life problems that you never seem to be able to fix. If you want to live a happy and fulfilling life you need to be organized and prepared for the future. There is nothing to lose if you prepare for your future by setting aside some money, but there is a lot to lose if you are unprepared, in debt and constantly stressed about money.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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