Budgeting For The Future: Three Reasons Why You Should Be Saving Your Money

When it comes to money, most people avoid the “B” word like it is monster. The “B” word is none other than budget, and it not a monster but rather the most powerful tool available to help set up a solid financial future. Solid money advice can help you start on the path to financial freedom and security no matter where you are in your life or how much debt you need to dig yourself out of. Here are three common sense reasons why you should be saving your money.


Everyone has heard stories of people in retirement running out of money and ends up eating dog food to survive. While those stories problem are not true, it is true that many elderly people do have trouble scraping by. Social Security checks do not rise proportionately with the rate of inflation. If savings is only minimal, within five to ten years you could find your nest egg gone. Most financial expert’s advice to assume you will live in retirement from 25-30. If you have no debt and a frugal lifestyle, a million dollar nest egg has been a nice round number for the last several years. This number varies depending on the amount of debt going into retirement and what is needed to sustain your quality of living. A million dollars may seem like a lot of money; however, to someone young it is very obtainable. Invest in good mutual funds in a 401(k) or an IRA/Roth IRA. Take advantage of any pretax dollar contributions and employer contributions.

“Rainy Day”

“Save your money for a rainy day” is the advice Grandma has always given and it has a lot of common sense truth to it. The unspeakable may happen: divorce, extended unemployment death with no life insurance, an illness or car accident with high deductibles are all things that require a rainy day fund. Most professionals would recommend at least three full months of living expenses in a very liquid form, such as a savings account. Once three months has been reached, shoot a little further. Aim for six to twelve months total available as an emergency fund. If you have children or other dependents, the higher the better to ensure you can adequately care for your family. Saving this kind of money is very difficult, but there are a lot of different books, articles, and resources for you to use to help you figure out how to make it work.

Purchase Things That are Necessary

If you purchase with cash, you have a distinct buying power over those paying with credit. In many cases you are able to obtain an extra cash discount; this is because the seller will not have to go through the hassle or pay a fee to a finance company. You know your car will eventually need replacing. Let’s say you were to look at a $10,000 car. You may be able to negotiate down to $8,500 or $9,000 paying with cash. An even more ambitious goal would be to save entirely and pay for a house with cash. If that is not possible consider a sizable down payment. Ideally, you want a minimum of 20% down on a house with only a 15 year mortgage. In addition to having a lower term and monthly payment, it is faster to save for vacation or other luxury items and experiences. The technical term for this method is having a sink fund. David Glenn is a freelance writer and retired entrepreneur with over 30 years experience in running a successful business. During that time he became very proficient at setting budgets and managing money.

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