Why You Should Start Saving Money Now

Different people save money for different reasons that are personal to them. These reasons may be to achieve financial independence, to leave something for future generations, to save for a new car or holiday or to have peace of mind “just in case”. Whatever the reason, it is important to start saving money right now because this will put you one step closer to achieving your financial goals.

By starting now, you will have more time on your hands. Time is one of the most important things that will help you grow your savings. Growing your savings is achieved two-fold.

The first is by regularly saving. By putting money away consistently, over time, you will have saved a good amount. This is a no brainer.

The second is compound interest. Very simply, compound interest is interest earned on your interest. If you put your money away consistently into a bank account that pays you a good rate of interest and you leave the interest earnings in the account with the rest of your original savings, eventually your bank account will snowball in size as time goes by because the interest earned will earn you even more interest. Saving money is like making money!

Another form of saving money is to repay any debt you have such as credit card debt, personal loans or a home mortgage. Often, these debt sources charge you an interest rate higher than a savings account will pay you.

Say for instance your have a credit card debt which is charged 15% interest each year. If you were to pay $100 extra towards your credit card debt that you would normally have put into your savings account earning you 5%, that $100 would theoretically earn you $15 that year as opposed to $5 in the savings account. This means you will “earn more” by paying down your loan faster, saving you a heap in interest repayments. Imagine having no credit card debt or taking years off your home loan!

Nothing can be more satisfying that achieving your financial goals and there's no better way than saving your money now.

PS. This article should be treated as general information only and not financial advice. You should speak to your friendly financial specialist for financial advice suited to your needs.