Saving money is extremely important. Why? Because you don’t want to rack up credit card debt or need to take out personal loans.
Credit Card Debt
It’s an unfortunate truth that in order to get anywhere in life, you need to have a credit score. The easiest way to get one is to open up a few credit cards. However, credit cards, if not used wisely, will make your life harder, not easier.
Credit cards are not free money, however, so many people treat them as such. In a perfect world, credit cards would only be used for small purchases that can be paid off easily to give yourself a good credit score or used only for emergencies.
Most people cannot afford to pay more into a credit card bill than the minimum payment, which means with the interest the card accrues, one will end up paying far more than what is ultimately owed at the end of the day.
Because of this, it is better to make a budget and save your money rather than diving in to something you won’t be able to afford down the road.
Personal loans, title loans, or any other kind of loan should only be taken out if the roof caves in or the car breaks down. Loans should only be taken out for emergencies and not to fund vacations, birthdays, or Christmas gifts.
Just like credit card debt, personal loans are a debt as well, and you’ll need to eventually pay it all back. Interest rates are how businesses make money off their loans, and again, you’ll be paying more out-of-pocket when all is said and done.
The smart thing to do is save up your money for your vacations, birthdays, or Christmas gifts and budget for those things throughout the year. Make a plan and practice self-control. Don’t buy what you don’t need.
Saving Your Money
It doesn’t matter if you can only afford to save $5 every week, the point is, you’re saving. If you cut out buying one coffee a week and saved that money instead, you’d have $260 in 52 weeks. Doesn’t sound like a lot, but it sure beats zero dollars.
If you cut out two coffees a week, you’d have double that, $520. In 5 years, you’ll have $2600, and that’s just by cutting out two coffees a week. Imagine what you could save if you were diligent and could tuck away $100 a month!
Determine to pay cash for everything. In so doing, you will not only own all your possessions outright, but you’ll be in a better place financially. You’ll know exactly what you can and cannot afford.
In the Long Run
Debt of any kind offers quick money now, but over time slowly drains you dry. Saving money now is a slow and long process, but when the time comes, you’ll be able to afford those things you want if you’re smart with your budget.
This is exactly what successful people do with their money. Do not spend beyond your means, and save your money to pay for everything with cash.