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.