IF YOU don’t have much money saved up, then you’re not alone. According to data published by Statista, more than a quarter of UK households had less than £1,500 saved in the financial year 2021/22. But if you’re wondering why you should start saving, what do you need to know?
In this article, we’ll discuss five reasons you should build your savings.
To give yourself a safety net
Having sizeable savings gives you something to fall back on in the case of an emergency. Having no savings to fall back on can make you feel like there’s no way to cope with your financial responsibilities.
This is something that many people experience. In fact, a poll published by the Mental Health Foundation showed that as many as one in ten adults feel hopeless about their financial circumstances.
But with savings, you can enjoy of level of peace of mind should an emergency arise, knowing you can avoid going into debt or making difficult choices just to make ends meet.
To enjoy greater work flexibility
For many people, needing to find a new job can feel like a death sentence. Whether they’ve been let go or want to leave of their own volition, the financial instability that comes with changing jobs can be extremely intimidating. This is another area where having savings helps. A cache of saved up money is like a cushion of support that gives you the flexibility you need to switch jobs.
To get your first home
There are certain financial criteria you need to meet if you want to get your foot on the property ladder. Not only do you need a good enough credit history but you also need to be able to afford the minimum downpayment. This means that consistently saving up your hard-earned cash and using a reliable way to boost your credit score are two essential ways you can prepare to buy your first home.
To work towards retirement
Depending on your age, retirement might seem like it’s still a lifetime away. But the sooner you start saving for your retirement the better. It takes a significant time to build up a decent nest egg for your twilight years. But if you start early then you’ll have less pressure later on, thanks to the power of compound interest.
To be able to help others
When you’re at a place where you feel secure in your own financial situation, you’re then in a much better position to help others. Whether you have loved ones who need some support or there are charitable causes you’re passionate about contributing to, using your money to aid other people can be an incredibly rewarding experience. But having the financial wellbeing to do this can’t happen without saving first.
Which of these reasons have convinced you to start building your savings?