Updated: Sep 19, 2020
Learning to save money is one of the best things you can do for yourself.
Financial security is one of the best reasons for why you should save money, and being prepared financially is one of the best feelings in the world. You can travel more, pursue your passions, quit a job you don’t love, try new things, and more.
But, I hear over and over again from people that they don’t want to save money now because they think they have the rest of their life to do so.
However, that’s far from true, especially if you want to be prepared for emergencies or retire.
When you decide to start saving money now, you will be ready to live the rest of your life.
You can take chances, try new things, and be ready in case something awful were to happen. Saving money gives you the freedom to worry less and live more.
Now, there are some situations when people do have a harder time saving money. Maybe you are living paycheck to paycheck, are working to eliminate high amounts of debt, etc.
Even though learning to save money can be hard, small amounts of money add up over time, and this is very true when you start now. Plus, there are lots of great ways to make extra money to make saving now easier.
Saving money takes discipline and some people may need to take extreme measures, but starting to save money now is one of the best things you can do for yourself.
Below is why you should save money even if you think you have the rest of your life to do so.
Learning a good savings routine now will help you later.
One of the top reasons for why many don’t start saving now and/or invest for retirement is because they claim that they don’t know how. Yes, it might feel overwhelming in the beginning – how to start investing, where to save your money, etc. But, these are things you can learn so it doesn’t have to be hard.
Once you get over the hump of getting started, you can create a routine where you regularly make contributions to a savings account or a retirement account. There are even investing and savings apps available to automate the process for you.
Acorns is a popular micro investing app that you can use to schedule deposits into your investment account – even just $5 at a time. You can also set up Acorns to round up transactions from a linked card to invest passively.
However you start to save and invest now and the sooner you do it, the more it becomes a habit and the easier it will become. By saving money as soon as you can, you will learn good financial habits that will help you well into the future.
Learn how to start investing at How To Start Investing With Little Money
You don’t need as much money as you think.
More and more people are choosing to live a minimalist lifestyle because they have realized that less is more. These people are living in smaller houses, not buying as much stuff, and being more thoughtful when they do make purchases.
These choices can lead to significantly spending less money on things, which makes it easier to save your money.
Now, leading a minimalist lifestyle isn’t for everyone. But, material items do not always equal happiness. Sometimes they just add stress, debt, and more. Think about it – the more stuff you have, the more likely that something will break, something will get lost or tossed to the side, and so on.
And if you think about the fact that the average household has 300,000 items (not a typo), that’s a lot of money spent on stuff.
However, do we actually need all of that stuff?
Spending money on a bunch of unnecessary stuff does not mean that you will have a higher level of happiness than someone else.
When you learn to live with less, you will find that you don’t need as much money as you thought.
An enjoyable life doesn’t have to be expensive.
One of the other things I hear about saving money is that it’s boring.
Yes, I have heard that if you are saving your money that you’re having no fun. In fact, here are a few myths I’ve heard about saving:
“I can’t save money because that means I’ll just be eating rice and beans and sitting on my couch all day long.”
“That person is only able to save money because they have a boring life.”
“I’d rather enjoy my life now and worry about saving money when I’m old.”
These are not true, at all. You know what they say when a person complains about being bored – that they are actually a boring person.
If you think spending money rather than saving money will lead to happiness, then you need to change your mindset.
Life is all about a comfortable balance. You can save money, spend money, and have an enjoyable life. It’s not one or the other. And, really, it’s all about knowing what you can actually afford and thinking about whether buying something will actually benefit your life.
There are plenty of ways to live an awesome life while saving money. Yes, you can still see your friends, have fun with your loved ones, go on vacations, and more, all while staying on a realistic budget.
Instead of going out to eat three to four times a week, you can prepare meals with friends or family or host a potluck.
Instead of taking an expensive vacation, you can do a roadtrip or plan a staycation.
Instead of spending lots of money on an expensive weekend out with your friends or significant other, you can go for a hike, bike ride, and more.
There are so many ways to have fun for free or cheap, and finding new ideas now can help you start to save money.
Compound interest matters.
Learning how to save your money is a wonderful thing, especially if you start investing. When it comes to investing, time is on your side because of the powerful impact of compound interest.
Compound interest is one important reason for why you should start to save your money now instead of waiting until you are older.
To put it simply, compound interest is when your interest is earning interest. This can then turn the amount of money you have saved into a much larger amount years later.
This is important to note because of inflation – $100 today will not be worth $100 in the future if you just let it sit under a mattress or in a checking account. However, if you invest, you can actually turn your $100 into something more. Investing for the long term means your money is working for you, potentially earning you an income.
For example: If you put $1,000 into a retirement account that has an annual 8% return, 40 years later that would turn into $21,724. If you started with that same $1,000 and put an extra $1,000 in it for the next 40 years at an annual 8% return, that would then turn into $301,505. If you started with $10,000 and put an extra $10,000 in it for the next 40 years at that same percentage rate, that would then turn into $3,015,055.
Side note: I recommend you check out Personal Capital if you are interested in gaining control of your financial situation. Personal Capital is similar to Mint.com, but much better. Personal Capital is free and it allows you to aggregate your financial accounts so that you can easily see your whole financial situation, including investments.
There’s no need to waste money just because you can.
There is no reason to spend all of your money just because you are able to. In my opinion, finding ways to save money will bring you greater security and peace of mind.
I’ve heard of people (even many who are close to me) say, “If I have money, I’ll spend all of it.”
If you decided to save your money rather than spend the last bits of it until your next paycheck, you will be on the road to saving more in the long run, meaning you can start to break free from a paycheck to paycheck lifestyle.
Even if you are only able to save a small amount, that is much better than not saving anything.
Like I said above, time and compound interest are both on your side, and this can turn the small amount of money you have saved into a much larger amount.
Stop letting others dictate how you live your life.
One of the reasons that people spend more than they should (and save less now) is because it looks like that is what everyone else is doing.
We’ve all seen the pictures on Facebook or Instagram of a friend with their brand new car, someone on an amazing vacation, or in brand new clothes. But, just because other people have something, that doesn’t mean you need to as well.
You have no idea how someone paid for those things. Maybe they make more than you think, maybe it was a gift, or maybe they are going into debt to “afford” things.
You are the only one who gets to dictate how to spend your money. And you can choose to save instead of spending money on things to keep up with others.
In 10, 20, 30, or 40 years, you could be living a comfortable life without debt, not stuck in a job you hate, and be pursuing your passions. Doesn’t that sound so much better than a life of debt and comparison?
The less money you spend now, the less you need in the future.
By spending less money, you’ll decrease the amount of money you need in the future. This includes money for emergency funds, retirement, and more.
This will help you build your emergency fund quicker and reach retirement sooner.
Just think about it: If you are already living a frugal lifestyle, then you will be used to living on less in the future. This means your retirement savings doesn’t need to be as large, which means it may be easier to reach that savings goal.
Also, if you spend less money, you probably won’t need as much in your emergency fund, which can also help you fund that sooner!
When you spend less money now, you can save at a higher rate, and that means you can reach your goals that much faster!
For example, Mr. Money Mustache has a great graphic in his blog post The Shockingly Simple Math Behind Early Retirement that shows you how your savings rate can dramatically impact when you’ll retire. For example:
Saving at the average personal savings rate of 5%, it will take you 66 working years until you reach retirement.
A 25% savings rate means it will take you 32 working years to retire.
A 50% savings rate means it will take you 17 working years to retire.
A 75% savings rate means it will take you 7 working years to retire.
So, by saving more of your money, you are likely to retire sooner. Sounds amazing, right?
There’s no guarantee that you’ll always have that income stream.
Time and time again, I hear from people that say they don’t need to save money now because they have a job.
Yes, you may feel safe and secure in your job, but the truth is that you never really know how long you’ll be making money or how long that job will last.
Many other people think, “But, I enjoy my job!”
While it’s great that you enjoy your job, you should still learn to save your money. Too many people think they can work forever because they love their job.
However, what happens when you can no longer work? You don’t know what the future will bring – you may encounter a medical problem, a serious life event, you may hate your job 20 years from now, and so on.
Why do people save money? One reason is because nothing is guaranteed.
So, instead of spending every last penny that you have, you should find ways to save more money.
The best things in life are free.
Stop for a second and think about your life. Do you have a friend you can count on? A family member who cares for you? A significant other to share your life with? Did a stranger hold the door open or offer you a smile? None of those things cost a dime.
Even if you just have one of these, you are still experiencing the happiness in life that comes free of charge.
There are so many free things in life to enjoy!
There are libraries, parks, free concerts, music on the radio, and more.
All of these amazing free things mean that you can stop spending as much and start to save money now.
Living a frugal life means you are taking advantage of what’s already around you. For some, this can be a hard mindset to get into, but when you realize you already have the most important things in life, you will realize that money isn’t the be all and end all.
There are many reasons to save money, and it’s never too late to start.
Starting to save money now will change your life.
Saving money is a mindset that you have to put yourself into. You have to make routines, make sacrifices, and change the way you spend money.
I know all of that is hard to do, but there is no greater feeling than being prepared.
And please don’t think that it’s too late to start saving. It’s never too late!
By learning to save at any age or stage of your life, you are making one of the smartest decisions you can for your future, even just a month or five years down the line.
What do you think? Do you think you should save money now? Or enjoy life and save later?