10 Benefits of Saving Money

Saving money can be challenging, especially when it feels like there isn’t enough to cover the bills or there is nothing left over afterward. The benefits of saving money impact various aspects of life positively. This article discusses some reasons why saving is important and how we can help you start saving for your goals.

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Reasons to Save Money

The reasons can all be summed up in a few words: Saving money provides you with freedom and flexibility to handle what life throws at you. You will probably pick up on some overlap between the reasons and that is because all the reasons illustrate the freedom and flexibility that saving money provides.

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1. Peace of Mind

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Financial stress is a reality for nearly half of Americans (Gillespie, 2024)! The stress can stem from too much debt, lack of retirement savings, housing costs or other financial concerns. Stress, including financial stress, can sap our energy, negatively impact our mental health and even hurt our relationships. Chronic stress has even been linked to various physical health issues, including hypertension, heart disease, and depression (Mayo Clinic Staff, n.d.).

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Knowing that we have or are actively setting money aside can provide peace of mind and reduce anxiety around finances. It allows us to live more comfortably without constantly worrying about money and frees up our mental energy to focus on other things that matter. When we have savings, we are better prepared for the unexpected. Whether it is an emergency medical expense or a flat tire, having a financial cushion can make these situations less stressful.

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2. Achieving Goals

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There are many amazing goals out there. Your goals may not even be financial goals, such as learning a language or training for a triathlon. Even these types of non-financial goals can benefit from saving money. 

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• Learning a language: Taking a trip to a country where that language is spoken may be just the thing you need to realize this goal. Immersing oneself in a new culture and practicing the language with native speakers can enhance the learning experience and improve retention. Or maybe you just want to enroll in a local course. Language classes, whether in person or online, often come with costs, such as sign-up fees and required learning materials. By saving money, you can afford that trip or course without feeling financially strained.

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• Training for a triathlon: Hiring a personal trainer or investing in the right gear can make crossing the finish line a reality. Participating in a triathlon requires a potentially significant investment in equipment, training, and sometimes travel. Running shoes, a bike, swimming gear, and entry fees can add up quickly. Having savings can help you not only afford these expenses, but also allow you to focus on your training to get the best possible result rather than worrying about how you will pay for everything.

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Whether they are financial, family or personal goals, savings can help us all plan and work towards our dreams systematically regardless of what the goals actually are. Having a clear savings plan allows us to allocate funds towards our goals consistently. This makes the goals more attainable and provides a sense of accomplishment as we watch the savings grow and the goals come closer and closer within reach.

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3. Financial Security

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Having money set aside reduces the need to rely on credit cards or high-interest loans to cover bills or unexpected expenses like medical bills, car repairs, home repair, or emergencies. There is a place for certain types of debt in personal finance (don’t tell Dave!), IF it is part of a planned strategy rather than a reactive necessity. While some debt, such as a mortgage, certain business loans, or student loans, can be considered “good” debt due to its potential to increase net worth, relying on high-interest loans or credit card debt for everyday expenses can be crippling.

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4. Responsible Debt Management

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Saving money allows you to avoid the debt trap. High-interest debt can quickly spiral out of control, leading to a downward cycle of borrowing and repayment that is difficult to break free of. You can cover unexpected expenses without needing to borrow money by having a savings cushion. Being prepared with savings not only saves you money down the line due to saving on interest payments but it can also keep your credit score healthy. A good credit score is essential for securing favorable terms for those “good” debt items. Financial security protects against the need to scramble to find money and decreases the need to resort to debt.

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5. Charitable Giving

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Support causes we care about is a common goal for some. This can look like helping family and friends in need, donating to charity, or buying Girl Scout cookies to support the local troop. Saving money allows us to be more generous and make a positive impact on both ourselves and others. When you have financial stability, we are in a better position to give back to the community and support the causes that matter to us.

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Charitable giving has additional benefits beyond the immediate impact on the recipients. Giving to others can boost our own happiness and sense of fulfillment. Knowing that we are making a difference in someone else’s life can provide a deep sense of satisfaction and purpose (The Ascent Staff, 2021).

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6. Tax Benefits from Charitable Giving

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Additionally, charitable donations can offer tax benefits by allowing you to reduce your taxable income. Be sure to consult with a licensed tax professional if you are looking to maximize your charitable giving for tax purposes.

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7. Navigating Life's Many Changes

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Life is full of surprises. Managing major life changes, such as marriage, having children, moving, or job loss, is easier with savings. Savings help us adapt to new circumstances with less financial strain, which in turn allows us to focus fully on the change itself. Major life events often come with significant financial implications. For example, getting married typically involves wedding expenses, while having a child can bring increased costs (e.g., healthcare) and new costs (e.g., childcare, education, etc.).

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When we have savings, we are simply better equipped to handle these transitions smoothly. It allows us to approach and navigate these changes with confidence and success. 

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8. Preparing for Professional and Geographical Changes

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Having savings gives us the flexibility to make decisions that align with our values and goals. For example, if you are considering a career change, having a financial cushion can give you the confidence necessary to pursue new opportunities without the fear of financial instability. Similarly, if you have been considering a move to a new city or country, savings can provide the necessary funds to cover moving expenses and help you settle into your new environment.

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9. Retirement Readiness

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You have worked hard. Many people reach retirement only to realize they did not save enough in their working years. It can be hard to make up the shortfall but it is doable.

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Creating a plan and saving for retirement can help ensure we have enough money to live comfortably in retirement and check off that bucket list. Retirement planning is an essential aspect of personal finance and, generally, the earlier we can start then the better off the future you will be.

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10. Freedom and Flexibility

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As mentioned earlier, this is what it all comes down to: freedom and flexibility. 

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Having savings simply gives us all more freedom and flexibility in life. It enables us to make choices based on our wants rather than having them dictated by financial constraints. It allows us to take that leap we have been contemplating for the last few years, take that sabbatical, go back to school, grow a family, or even change careers. Financial freedom allows us to live life on our own terms, without being limited by financial worries.

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One of the most significant benefits of financial freedom is the ability to pursue our passions and interests. Whether you have a dream of starting your own business, traveling the world, or volunteering to a cause you are passionate about, having savings gives you the financial security to pursue these goals. We can have the freedom to leave that job causing burn out and have the flexibility to take risks and explore new opportunities.

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Financial freedom gives us a sense of security and peace of mind. When we have savings, we are better prepared to handle life’s curveballs. We can navigate the unexpected challenges and the emergencies with greater ease and confidence. This security enables us to focus on living a fulfilling and meaningful life, rather than constantly worrying about how we are going to make rent or the next mortgage payment.

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Last but not least, financial freedom enables us to make choices that align with our values and priorities. We can make decisions based on what is best for us and our family, rather than being driven by financial necessity and constraints. This independence allows us to live a life that is true to our values and goals, which in turn leads to greater satisfaction and happiness.

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Next Steps

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Hopefully, this has helped you see just a few of the many ways that saving money can significantly improve your financial well-being and overall quality of life. By developing good financial habits and creating a savings plan, you can achieve financial freedom and enjoy the peace of mind that comes with having a solid financial foundation. 

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If you are living paycheck to paycheck, the first step is to take your money out of your head and onto something you can look at, like paper, a spreadsheet, or a budgeting software. Simply getting it all laid out in front of you can give you incredible insights on how to create a buffer between your paycheck and bills.

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Creating a budget is a crucial step in gaining control of your finances. Start by tracking your income and expenses for a month to get a clear picture of where your money is going. Identify areas where you can cut back and allocate those savings towards your financial goals. At the same time, be on the lookout for opportunities to increase your income such as asking for a raise, picking up an extra shift, moonlighting, ubering, doing a side hustle. This additional income will go a long way in creating and extending the buffer between your expenses and your income. Use budgeting tools and apps to simplify the process and make it easier to stay on track.

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Building an emergency fund should be a top priority. Start off with trying to save $50 in a separate and easily accessible account. Work your way up to $100, $250, $500 and so on until you have three to six months’ worth of living expenses. It’s perfectly fine if this takes a couple years to do. The important thing is to start working towards it today and you will get there after consistently saving over time. This fund will provide a financial cushion in case of emergencies thereby reducing your reliance on credit cards or high-interest loans.

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If you are already able to save money, congratulations on being in such a strong financial position! It’s important to give that extra money a purpose and a plan. Think of a few things you would like for that money to do and allocate those savings accordingly.

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Consider setting up multiple savings accounts for different goals so you can easily see your progress and stay motivated as you work towards each goal. Automate your savings by setting up automatic transfers from your checking account to your savings accounts to ensure that you are consistently saving money without having to think about it.

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How MyBudgetCoach Can Help

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No matter where you are on your personal financial journey, budgeting with MyBudgetCoach can help you better understand your personal financial picture and work towards your goals effectively and efficiently. Most importantly, budgeting with MyBudgetCoach and working with a budget coach can give you more freedom and flexibility. 

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MyBudgetCoach offers robust budgeting software to help you create and stick to a budget. By using a digital envelope and zero-based budgeting system, you will have improved financial clarity on day 1. You will also get to choose a budget coach that fits your needs and lifestyle. 

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Your budget coach can help you with the following (and then some!):

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• Navigate the more complex and nuanced areas of your personal situation. 
• Develop a customized savings and spending plan that aligns with your goals and priorities. 
• Provide consistent ongoing support and accountability to help you stay on track and make informed financial decisions.
• If applicable, help you develop a sustainable debt management plan.
• Be there for you when life throws a surprise your way (both good and not-so-good surprises).
• Help you navigate major life changing events.
• My favorite one, help you secure financial freedom and flexibility.
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Start saving today and take control of your financial future!

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References

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Gillespie, L. (2024, May 9). Money and Mental Health Survey. Retrieved from Bankrate: https://www.bankrate.com/loans/personal-loans/money-and-mental-health-survey/

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Staff, M. C. (n.d.). Chronic stress puts your health at risk. Retrieved from Mayo Clinic: https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/stress/art-20046037#:~:text=Heart%20disease%2C%20heart%20attack%2C%20high,Problems%20with%20memory%20and%20focus.

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Staff, T. A. (2021, October 27). Study: It Pays to Be Generous. Retrieved from Fool: https://www.fool.com/the-ascent/research/study-it-pays-be-generous/