Why is saving money a good idea?

Question

Jalon Huels · Answer

Saving money is a good idea for many reasons:

It allows you to work towards worthwhile goals, such as a house or maybe even that bike you always wanted. The term "bread today, jam tomorrow" is often thrown about - I'll quickly explain it and reference it to the question you're asking. We can either spend our money right now and in the short run we would be happy (let's say we just bought a new TV). However if we saved that money instead of spending it, we would find ourselves later being able to buy things which give us happiness in the long run as well as the short run (a car).
Saving money also gives us a sense of security and something to fall back on if all hell breaks loose (you get fired/have a period of part time employment, etc). My point being - we all need a Plan B, and in all honesty, money is what makes the world go 'round. The more money you have saved, the more relaxed you can feel about your future/retirement.
Now, of course we need to spend money on day to day goods (often called necessity goods) - one example is bread/water. But if we stop wasting money on things we don't need in the short run, we can have more overall happiness (commonly measured in utils) in the long run.
Now if you're not already smiling to yourself, an even better reason to save is that you can earn interest on that money you're saving due to something called an interest rate. I'll give an example. If you decide to save $100, by the end of the year you'll end up with around $101-$102. At face value this does not seem a lot. However, in the long run, you are better off then you were if you spent that $100 as soon as you got your pay check/allowance.

Now I'm not telling you to constantly "save, save, save!" I just believe that more and more people should save money - even if it be for a rainy day and you fancy going out for a nice meal. I think that the problem with a lot of today's society is that as soon as they get their paycheck, they immediately spend it on unnecessary goods (a pair of shoes when they already have many perfectly suitable pairs).

Every year millions of people spiral into debt due to overspending. If you're careful with your money, you won't have the need to take out a loan, which could leave you in almost more trouble then you started out with.

One good method to cut out pointless spending is to look at your bank statements and carefully scrutinize what you are spending your money on. If you ever get into a situation in which you are struggling terribly, then just make sure you spend even less on necessity goods (choose value range items) and slowly start putting small amounts of money into your saving account. What many people fail to realize, even today, is that money, no matter how small, all adds up. For a period over the summer (around 2 months) I decided to have a bowl in which I would put all my change in (and I mean all). By the end of it, I counted it all up and realize I had over $200 left over, and I'm only 17! I immediately put it in my savings account, and now it is sitting there accumulating in value every day.

Just to reiterate this again - I don't want you to feel that from now on you should not spend any money and have no enjoyment. We all need to make ourselves feel good, and most of the time money is the solution. However, what I am trying to say is that we don't need to do this all the time.

The fact is, everyone around you is somewhat saving money. The only difference is that some are saving a higher percentage of their income and will therefore in the long run be able to have more fun. Example - if you pay too much for your lunch every day (let's say you should be spending about $6 less) that will eventually add up into what could of been spent on a holiday/project/hobby. Yes, the people who spend $6 less then you may not have as fancy a lunch as you, but they will be the ones who can afford to spend money on things they find more important.

Another peice of advice to you would be to think before you spend. Ask yourself if you really need to spend "x amount on y" because at least in my experience, most of the time I back away and decide not to buy the good/service. Money comes and goes in life. Just be wise with it and not much else can go wrong. And if you do decide to save your money, I'm sure that you'll be glad that you did in the future (just like how I'm glad that I didn't buy that stupidly overpriced football jersey).

Finally some short but sweet advice for all the young people reading this:

-Appreciate the value of money. Once you break out into the real world, you won't have your parents to support you. The sooner you learn how to spend it cautiously, the better.

-Only buy things you really need (unless you're treating yourself).

-Keep track of what you are spending (I mean everything). Noting down even the smallest things will let you know how much you are spending overall, it may even trigger you to stop buying a certain item (sweets, DVD's).

-Get a bowl/piggy bank/savings account. Put all your excess change/money into one of the above, it'll help you stop losing money but also let you know how much you are saving.

-Your money belongs to you. Don't feel pressured to pay for things for other people because they may take advantage of you. Obviously it's nice to help your friends out, but don't let it get to the stage where they see you as a financial aid.

And finally a quote by Oscar Wilde:

"When I was young I thought that money was the most important thing in life; now that I am old I know that it is."

Wiki User · Answer

Saving money is a good idea for many reasons:

It allows you to work towards worthwhile goals, such as a house or maybe even that bike you always wanted. The term "bread today, jam tomorrow" is often thrown about - I'll quickly explain it and reference it to the question you're asking. We can either spend our money right now and in the short run we would be happy (let's say we just bought a new TV). However if we saved that money instead of spending it, we would find ourselves later being able to buy things which give us happiness in the long run as well as the short run (a car).
Saving money also gives us a sense of security and something to fall back on if all hell breaks loose (you get fired/have a period of part time employment, etc). My point being - we all need a Plan B, and in all honesty, money is what makes the world go 'round. The more money you have saved, the more relaxed you can feel about your future/retirement.
Now, of course we need to spend money on day to day goods (often called necessity goods) - one example is bread/water. But if we stop wasting money on things we don't need in the short run, we can have more overall happiness (commonly measured in utils) in the long run.
Now if you're not already smiling to yourself, an even better reason to save is that you can earn interest on that money you're saving due to something called an interest rate. I'll give an example. If you decide to save $100, by the end of the year you'll end up with around $101-$102. At face value this does not seem a lot. However, in the long run, you are better off then you were if you spent that $100 as soon as you got your pay check/allowance.