Saving/Investment is very important, Do you Know Why?

We all save money, consciously or unconsciously.  But do we all save money enough as required for all our needs?

We have dealt with so many people who are not as prudent and forward-looking as we need to be. Many people are hand to mouth when it comes to saving money. They are just postponing their savings in future and relying on luck or maybe not putting enough energy to save money.

In this post I thought of writing few specific reasons that why we need to save/ invest. Please note that all the reasons may not be applicable to you but even if there is one reason we should be saving enough. Note, here we are using saving and investing as same for understanding purpose.

1.  We can’t keep on earning forever:

Yes everyone has to retire and our life (which is generally 80-85 years) is longer than our working age (usually 55-60 years) so we need to save for the time when we will not be working anymore. This is called Retirement Planning.

2. For Bad Times

The year 2020 has taught us a great lesson that time keeps on changing and there can be a prolong period when we have to live with challenges. In this year people lost jobs and also faced medical emergencies. All these things teaches us to save money for bad times which comes un-announced as it did in last year.

3. To avoid Debt Trap

Debt trap is kind of viscous circle. It starts with small loan and if not managed properly it snowballs and then we find ourselves into a deep debt trap. Think why we need small debt like credit card debt or a small personal loan of 2 lacs? Because we have not saved enough. The root cause of the debt trap is insufficient saving, and then slowly have to rely on debt to fund our needs and desires.

4. To fulfil various financial Goals

In everyone’s life, as we grow, we have various goals/needs like Kids education, Home, Car, Foreign Vocations, Kids Marriage, retirement etc. All these goals need money to be achieved. If we start our wealth creation journey early in life the chances of meeting these financial goals increases with less stress and on time without compromising on them.

5. Feeling of Achievement & growth

Sense of growth and achievement is very important in life. We may have ZERO bank balance at the start of a career. But if after working for 8-10 yrs, still it is hardly anything – then its depresses us from inside. If your Net worth if not going up, you are probably a RICH SLAVE” and nothing more than that. Saving just Rs. 10,000/- monthly for 30 years, you can have more than Rs. 3 crores (assuming 12% annual returns). Think about it!

6. To Spend without any guilt

We all work hard to earn money so that we can spend it when we need it for necessities and sometimes for luxuries or just like that. There are families who do not take enough vacations or spend properly on themselves enough. They keep cutting corners and often try to show that they are simple people and they don’t believe in wasting money. But deep down the reasons is that they just don’t have wealth! So to spend without any guilt first we need to save. So start your saving today.

7. To explore life and other career

Many of us are not happy with our current work/job, but can’t leave it as we don’t have any backup plan. If we have sufficient money we can take calculated risk. If we don’t like what we are doing today we can leave it and start exploring other options without having tension of meeting daily expenses.

8. To be financially free

Everyone wants to reach a stage in life when we don’t have to depend fully on our salaries. We all want to create a level of wealth so that it’s enough to generate some income for us to handle our basic expenses at least. This is called Financial Freedom. If you are saving properly you may reach to this level in your 40s-50s (it is different from Retirement savings).

9. To leave a Legacy

Imagine someone in a big city (Mumbai) whose parents are going to leave them a house or a big portfolio/business. Someone burdened with a big EMI and no future inheritance can understand it better. Getting money from your parents/forefathers can give a big comfort to someone who just started his career. It may not solve all the problems but still can give a mental comfort and may help to take some calculated risk and do what you want to do.

10. To have a peace of Mind

We all want to live peacefully, and money is one of the main reason for most of the worries. There are situations like layoffs in company, medical emergencies, rising educations fees which keeps us haunting.  If we have saved enough, many of these worries can be solved which not only gives us happiness of fulfilling our goals but also gives a peace of mind.

Money may not solve all of our problems but still for many problems the root cause is money, So if we have it we may be able to resolve most of our life's worries and live comfortably.