Throughout my banking career I have met many persons that came to me for financial advice. One common factor with all these persons was their lack of knowledge about savings. There is a huge misconception that persons either need to have a lot of money to afford to save or there needs to be an immediate need that they are saving towards. I am here to tell you today this could not be further from the truth. We all need to save. There are so many benefits of saving and proper financial management. I am going to highlight just a few of the main reasons persons need to save:
1. Medical Emergencies – Although you may not want to think about it, there may come a point in time where you may be faced with the burden of high medical bills. Most persons that have high medical bills would tell you they were not prepared for it financially. You need to ensure that you have a good medical plan in place together with a good critical illness plan. You may be young however this does not mean that you are free from disease or illness. You need to get the notion out of our mind that only older persons suffer from heart attacks or critical illnesses. You should not wait for it to hit home and for someone close to you to get ill or find out they have cancer for you to realize how unprepared you are for it. The last thing you want to have to do when finding out about issues relating to your health or those close to you is to go into debt. In some cases the illness never goes away. What do you do then? If you do not yet have a plan in place I urge you and I beg you please ensure that you are well covered in the event of any unforeseen medical illness and ensure that you have funds set aside to take care of the expenses that your insurance plan may not cover.
2. Travel/Leisure – It always amazed me how many clients came to me for vacation loans. I never understood why someone would want to take a loan and pay interest on it for vacation. If you think about it, the same monthly payments you would be making for the loan you could have been saving each month leading up to the vacation instead of having to take a loan for it. What you may find happening is that you would be tied down into paying back this loan for 1-3 years. During this time most persons would end up not being able to go on another vacation because they are still paying off this debt. So guys, saving now even though you may not have in mind when or where you want to travel to. At least when the time does come funds are in place for same to happen. Also, you can enroll in a travel rewards program where you would be able to accumulate points to get free tickets. Most banks offer a credit card with a rewards program. So if you have time visit your local bank and find out if they have one and how it can benefit you.
3. Weddings – Weddings are beautiful. If you are presently dating/courting someone and you realise things are getting serious and there are talks of getting married, it may be a good option to open a joint account together to save for the big day. Weddings are getting more and more expensive with each passing year so it is very important to ensure that you are saving towards it and you don’t end up in a situation of having to put off your wedding for a longer time because of lack of funds. It is always important to remember there is life after a wedding. You don’t want to have to go into a marriage with huge debts from your wedding. If the situation is one where you do have to borrow make sure that the borrowing is minimal and can be paid back in a short time frame so as to allow you to save towards starting a family/going on a vacation/going back to school/purchasing a new vehicle/down payment on your home or any other goals you may have as husband and wife.
4. Your Children’s Education – One thing that is a fact is that the cost of education is increasing with each passing year. As parents it is important to ensure that there are plans in place for funding of your child’s education. You should not wait for your child’s year of graduation to start deciding how you are going to be able to afford their college/university education. As much as possible, once it is within your means, start an education fund which would be available for them upon graduation. It is hard when children have to take loans to fund their studies because upon graduation they remain with this huge debt which usually takes them up to 10 years to clear off. So parents, as much as possible try to assist them with this debt. Set goals and stick to it to ensure a better future for your kids.
5. Buying your first home – one problem that many young married couples face is the inability to afford their own home. The real estate market as most other markets is increasing yearly and most persons are finding it difficult to be able to afford their own home. If you are single but you have plans of one day buying your own home start saving from today. You do not have to wait to find someone to start saving. Find a good investment plan that would benefit you and work for you in the time frame that you have set for the purchase of your home and watch your dream become a reality. The joy that you receive from knowing that you can afford your own home, no one can take away from you. Let no one tell you that you would never be able to afford a home. Once you have something in your heart don’t let anyone’s negativity prevent you from attaining it.
6. Retirement – Ask yourself today one question “Am I prepared for retirement?”. If the answer to that question is no then you need to really take a look at your life. Retirement creeps up on us and you need to ensure that from now you have put in place a good pension plan. Find out from your employers how much your pension plan is so that you would be able to decide how much you need to invest in a pension plan of your own. The lifestyle you build for yourself now on your present income needs to go on when you retire so ensure that the money you would be receiving upon retirement can maintain this lifestyle. In my opinion this is one of the main things we should be focusing on from the day we start working. You do not want to become a burden on your kids when you retire so make the necessary phone calls and start saving for retirement today.
I am available to chat if anyone may need advice along these lines. I know sometimes it may seem like we can’t afford to save but just take a few moments and re look your budget. Is there anything on there that you may be able to do without so that you can save?
Beware of little expenses; a small leak will sink a great ship. –Benjamin Franklin