Why Is Saving So Important?

We save, basically, because we can't predict the future. If we could, we would know precisely how much money we would need for the things that we want and need in the future. But because we can't do this, the need to save money for the future is vital.

Think about these few reasons why:

Emergency cushion - This could be any number of things: a new roof for the house, out-of-pocket medical expenses, or a job layoff and sudden loss of income. You'll need money set aside for these emergencies to avoid going into debt to pay for what you need.

Retirement – If you intend to retire someday, you'll probably need savings and/or investments to take the place of the income you'll no longer get from your job.

Average Life Expectancy – With more advances in medicine and public health, people are now living longer (and needing more money to get by).

Volatility of Social Security – Social Security was never intended to be the primary source of income and should be treated as a supplement to income.

Education – The costs for private and public education are rising every year, and it's getting tougher to meet these demands.

Without money put away in savings and/or investments, you may open yourself up to other risks as well. For example, not having enough money to pay for emergency dental care may force you into taking a loan that your savings might otherwise have covered.

Saving Money for Living the Luxury Life

There are a host of millionaires and billionaires in the world today. Some of them won the lottery, others were successful in business, and a few inherited their wealth from family. Regardless of the method, one can become financially independent overnight or over decades. While luck may play a big role in how some make their money, it takes another skill entirely to keep it. Financial planning is an essential skill necessary to have money for future plans to live in the lap of luxury.

 

How To Save Money

1. Saving money is an important activity that helps to make one's future bright. Many learn bad habits of managing money from family members and these practices carry on into adulthood. To build a healthy and stable future, saving money is fundamental and making it a priority is the first step to making one's millionaire status a reality. Here is a simple guide for novice savers to utilize as a means of jump starting their financial health.

The first step to saving money is to decide that it needs to happen. Making financial health a matter that is as important as physical, emotional, and spiritual health will put one's mindset in the right place for making positive changes and a happier bank account.

2. Learning how to save money is one of the most important preparations for your financial future. And while saving money isn't always the easy thing to do, it isn't impossible. It takes determination and dedication, but you CAN do it, and the earlier you start, the better off you will be in the end.

While the idea of setting aside a portion of your income for a rainy day is an appealing idea in theory, in reality most people find it hard (if not downright impossible) to develop and stick with a responsible savings plan. But while it may take a good deal of commitment and sacrifice for you to reach your personal savings goals, the financial benefits that can come from a robust savings plan far outweigh the short-term cutbacks that you may have to endure.

Why You Should Save
While the benefits of saving money may seem obvious (MORE MONEY!), there are a number of advantages to having a healthy savings plan that you may have not considered such as:

• emergencies – unemployment, disasters, bad investments, illness can occur and it’s nice to be prepared for them;
• debt prevention – paying cash as you go instead of running up high-interest credit cards, is more efficient and saves lots of money; and
• planning for the future – money for your children’s education, a new car, or retirement can cost a lot of money which a good savings account or investments can help you pay and lessen your loan obligations.
  

So, if you're ready to start saving money, hopefully the following tips and suggestions will help get you started on the path to financial responsibility.

Common Mistakes With Regards To Financial Planning

(Source: Certified Financial Planner Board of Standards)

• Do not have measurable financial goals

• Make financial decisions without understanding their effects on other financial issues

• Neglect to re-evaluate their financial plan periodically

• Look for a quick financial fix instead of a long-term strategy

• Expect unrealistic returns on investments

• Think that financial planning is only for the wealthy

• Think that financial planning is only necessary when they get older

• Confuse financial planning with investing

• Think that financial planning is primarily tax planning

• Wait until a money crisis occurs to begin financial planning

• Think that using a financial planner means losing control

Benefits of Financial Planning

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Benefits of Financial Planning

If you're like most people, your daily life is focused on your immediate needs and those of your family. You may think about the future, but the thought may be just a passing one, as day-to-day concerns like work, errands or taking the kids to Little League practice take up most of your time.

One day your children will leave home and have lives of their own, and you may want to stop working.A financial plan can help you prepare for these events and the others that will inevitably occur, whether you anticipate them or not.

How can a financial plan help?

A financial plan can help you:

Assess your financial situation by helping you track income and expenses, establish an emergency fund, and determine your overall net worth.

1.Save for major expenses like funding a child's education, buying a house or car, or developing a cash reserve for special occasions like weddings and vacations.

2.Plan for your retirement by estimating your retirement income and expenses and the value of government programs. Then you can begin to determine the amount you need to save to meet your retirement goals.

3.Assess your risk tolerance and develop an asset allocation strategy.

4.Plan to reduce your taxes, project the effect of income taxes, and develop a tax-deferred strategy.

5.Protect you and your family against financial crisis should you become disabled or die.

6. Plan your estate to ensure your assets are distributed the way you desire, fund estate taxes, and minimize their effects where possible.

Finally, a financial plan can give you a clear picture of where you are, a strategy about where you are going, and peace of mind about your future. It's never too early to start.