Why is saving important?
Saving is important for many reasons, but one crucial one is that it helps you weather the ups and downs of everyday financial events. For example, people who save tend to be better positioned when it comes time to rebound from setbacks such as losing income- this gives their wallets some much-needed wiggle room! Plus, saving also lets us invest in ourselves by developing healthier spending habits, making financial goals more achievable.
Why is spending important?
The old saying goes, “you have to spend money to make money.” While this may not always be true, there are some situations where spending a little cash can end up saving you money in the long run. With the exceptions to expenditures essential for survival, other instances when it is important to spend money to help improve the quality of life
A few examples may include:
1: Buying a house versus renting, which is an everlasting expense
2: Going to college with the intent of a career
3: Purchasing a car if your daily commute is excessive
4: Investing in something to make more money possibly
5: Vacations/entertainment to enjoy life and relieve stress
Ultimately, the decision about whether to spend money is a personal one that depends on your individual needs and wants.
How to Balance?
This balancing act may prove difficult for some, but it is worth figuring out.
Make a budget and stick to it.
This will help you stay within your means and make decisions about spending and saving more efficiently. When you have a budget, you know exactly how much you can afford each month, and you’re less likely to overspend. Plan a budget that covers your bills and allows you to save a set percentage of your income monthly, starting with 10%.
Take the time to evaluate each situation carefully.
This means considering your options and figuring out what is most important to you. Try classifying purchases as a want or need and ask yourself if you need the item immediately and if you can get a better deal by waiting or elsewhere.
Avoid impulse spending and monitor spending habits.
If you’re not careful, impulse buying can quickly deplete your savings account. So, try not to shop when you feel emotional or stressed out. Be mindful of your spending habits and avoid overspending on unnecessary things. It’s easy to get caught up when you’re shopping, but if you’re aware of your spending patterns, you’ll be less likely to overspend unnecessarily.
Contribute extra money to your savings.
If you have a coupon or an item is on sale, put the saved portion into your savings account; you already expected to be without this amount, so why not save it?
Deciding how much to spend or save is unique to everyone, but regardless of your financial situation, everyone needs this skill for self-preservation and future growth!