Why Having Savings Behind you Could be Really WorthwhileWhy Having Savings Behind you Could be Really Worthwhile

There are many people that have a lot of savings behind them, but there are also those that struggle to save. It may not always be clear as to why it is worth bothering with saving and so it could be something that some do not even really consider doing. However, there are a lot of good reasons why it could be extremely useful and it is worth understanding some of those reasons so that you can consider whether saving up some money would be a good idea for you.

To avoid borrowing

Although borrowing money can be extremely useful, loans do all come with a cost. You will have to pay interest on the loan, usually all of the time until it is repaid. You may also need to pay some sort of fees as well, depending on the loan. The total cost of the loan will vary depending on the lender, how long you have the loan and how much you have borrowed. However, there will always be a cost.

If you have savings to fall back on rather than having to borrow money to pay for a loan, then this will be advantageous. This will allow you to avoid borrowing and therefore avoid that extra cost. It will mean that the things that you are buying will effectively be cheaper as you are not paying those extra costs for them.

Some people do not like borrowing for other reasons as well. These can vary a lot and by having savings, it will mean that they can avoid borrowing.

To give a sense of security

It can make you feel safer knowing that you have some money behind you. You will feel secure because you know that there is some there if you need. There are all sorts of reasons why you might need a it of extra money from time to time and knowing that there is some there if you need it can make a considerable difference to how secure you feel with your financial situation.

To pay for big purchases

If you have something big to pay for, then it is likely that you may normally need to consider getting a loan to pay for it. This is because it is likely that you will not have enough from your normal salary to be able to afford it. However, if you have some savings then you might be able to use those instead. You may even be able to save up money until you have enough to pay for the item. If you have the money already it will mean that you will be able to buy the item much more quickly compared with if you have to wait to save up or if you have to wait to organise a loan. It will also be cheaper to use savings than to borrow the money.

To fall back on in emergencies

If you suddenly find that you have a bill that you need to pay for that you cannot afford or you are struggling to make ends meet then having some savings is really worthwhile. You will hopefully be able to use those savings to be able to afford to get through that situation. It can be better than having to wait to organise a loan, which could take too long for you to have the money when you need it. You will also find that it will be cheaper to do this than to get a loan, as even though you will earn interest on your savings, the cost of the interest on the loan will be higher.

Get some interest

Savings accounts will usually pay you some interest on your money. Although interest rates are low, this will be better than not getting anything in return. So, it can be worth putting money in a savings account just for this. It is well worth comparing interest rates though as these will vary depending on which financial institution you save with. You will also find that different types of savings accounts will have different rates. If you want instant access then the rates will be low, but if you are happy to give notice to withdraw or to tie your money up for a few years or so, then you will get more interest. You may decide to split your money between different types of accounts so that you have some which you can get hold of quickly if you need to and some that will earn you more money.

So, if you do not have any savings, then it is well worth considering whether you should get some. As you can see, there are lots of good reasons why having saving can be helpful. So it could be good to see whether you can cut back on your spending so that you are able to afford to save some money each month and build up a resource that you will be able to use when you need it.

Why it Could be Important to Stay out of DebtWhy it Could be Important to Stay out of Debt

Debt is something that some people avoid all of the time, but there are others that have too much of it. It is something that can be very helpful at times but it is important to make sure that you get the balance right. For example, most people would not be able to afford to buy their home if they did not have a mortgage and therefore the loan is extremely useful. However, having a big overdraft can be very expensive and often the money is used for items which are not necessary and do not really help us to better ourselves. Therefore, it could be worth trying to avoid this sort of debt. There are many reasons why it could actually be worth staying out of debt.


All debt costs money and this can be a great reason for avoiding it if you can. You will always be charged interest on the money that you borrow. This will be a percentage and it will vary depending on what type of loan you have. It is often the case that a short-term loan will have a higher percentage but a long-term loan will be more costly as you make repayments for longer. The loan may also have other charges, but this will depend on the type of loan. It is always worth finding out exactly how much they will cost as you can then decide whether you think that they provide good value for money. You can also compare them with other loans and decide whether you really want this type of loan or whether there are others that you will prefer because they seem to be better.

It is also worth thinking about the repayments. You will usually be expected to repay a certain amount each month. This amount will vary depending on how much you borrow and how long you are repaying over. It is really important to make sure that the amount that you are repaying is manageable. Many people find finances difficult to manage when they have loan repayments that are too high. This means that they are struggling all of the time to find enough money to pay for everything. It is therefore really wise to only take on a loan if you know that you are going to be able to afford the repayments.

Credit record

All of your financial history is shown on your credit statement. This means that everything you do, both positive and negative is there. This is then looked at by any potential lenders or other creditors and so it could have an impact as to whether you are accepted for future loan, rental agreements, contracts and things like that. If you credit record shows that you have had previous debt and struggled to repay it or that you have lots of current debt, then it could be the case that you will be turned down for whatever it is that you are applying for. It can be a tricky balance to achieve though because if you have no loans at all then a lender will not know whether you are going to be reliable for repaying things. However, if you make regular payments, perhaps for utility bills or something like this, it should be enough to show that you are capable of making payments, without having to borrow money in order to demonstrate that.


There are some people that feel stressed when they have debts. This can be because they struggle to make the repayments, they feel that it is too much to cope with or they do not like owing money. It can be worth trying to have a positive approach towards loans if you can as they can be extremely useful. However, making sure that you are in control of the repayments is really important. It is a good idea to make sure that you only take on a loan when you are sure that you know exactly what you will be expected to repay and that you have checked to make sure that you are going to be able to afford to do that.

To open up future opportunity

If you are thinking of getting a big loan in the future, perhaps a mortgage, a loan for house renovations or to buy a car, for example, then you might need to be careful about any borrowing that you do in advance of this. You will need to make sure that you still have a good credit score so that you will be able to borrow a big sum of money. You will also need to make sure that you will be able to afford the repayments and if you have other loans that also need repaying, this could be difficult.

So, although loans can be extremely useful, they do need to be planned well, both in light of your current financial situation and your future plans.