Why saving is important?

We constantly hear that “saving is important”. Sounds logical and, basically, we all know we should save a portion – by more minimum that is – from our income. The reality is that saving is important, and the reason for this goes much further than simply gather some money in the bank.

saving is important

Then a look deeper the benefits and impacts that are achieved when saving money:

Having available money for uncertainty
It is the most immediate and obvious reading: to save, there is a lot of money in the bank, which guarantees the ability to respond to various situations that may arise, as well as have the peace and security to account with that money.

Avoids the need of debt
When we have money in the bank, we do not need to borrow money or use credit card to buy what we need. Instead of buying something on credit, we pay at the time, cash. What does this mean? We pay less for the same product. In short, prior savings allowed to now buying a product, paying much less for it.

The savings out of debt is an act of patience. When we are willing to wait to collect all the money to buy a product, we are sacrificing the immediacy of it, but much less money is paid. And there is another power saving: pay less for purchases that we make.

Provides the opportunity to invest
The third level of benefits to save money is to have the ability to earn more money. The saved money can be invested, instead of having “slept” on the bill. It is money that generates more money. Therefore, not only have we saved money, but that money, in turn, has more money.

In general, in all countries there are different ways of investing money, beyond the amount that they have. It is reported, ask acquaintances and find how to invest the money. Always consider the risk and rate are “proportionate”, i.e., the higher is the rate of return on your investment, the greater the risk implicit in it.

Allows to have a better bargaining power
Before any kind of negotiation, whether at the enterprise level as when hiring – for example – an ISP at home, having money saved endowed you with greater bargaining power. You can pay in advance, and don’t need to go into debt.

And there is the great magic of savings: the system is designed to reward people who save, and punish people who do not.

It’s like a snowball that is growing or decreasing, according to which way trip. The rich save money, invest and make profits. As have much money, they can save more and more, invest more, and earn more. The poor – in change – can not save, because their income does not allow it. Consequently, they remain with debt, which means borrowing money to pay for that. Increasingly they are becoming more difficult to pay their debts, so they incur more and more credits, becoming poorer.