The Importance of Saving Money: How saving today can ensure a better tomorrow

What is the importance of saving money? What impact if any will saving today have on your future? Should you be worried if you have no savings plan in place?

Saving money is not important - it's essential! Why? Because your financial well-being now and beyond is directly related to your ability to save money and live beneath your means.

For most of us saving is our only hope for achieving any degree of financial security now or into our retirement years. The earlier you start saving - the better your chances of achieving your financial goals.

Here's food for thought: Over 80% of recently retired baby boomers regret not having starting saving when they were younger, even in their teens to start saving for retirement. 90% of them also agreed that having enough money for retirement requires alot of planning and advice to reach your goals.

Having trouble finding money to save?

• Pay yourself first - Pay yourself first whatever amount you can afford (atleast 10% of net income is recommended) with an automatic deduction from your payroll or bank account. Then work with what's left over to cover your expenses.

• Revisit the budget - Find money to save in your budget. Cut out whatever you can to free up money for savings. If your starting with no savings your first savings goal should be to save for emergencies (emergency fund). If you can only save a little bit - don't worry about it. Just save what you can, it will pay off big in the long run!

• Get out of debt - If your carrying any kind of high interest debt put your savings plan on the back burner and make getting out of debt your #1 priority. The money you put away into savings won't grow nearly as fast as your debt at a rate of 19% or higher. Wipe out the debt then save!

The Importance of Saving Money - Short Term

Prepares you for the unexpected - Saving money short term provides a cash buffer to cover those unexpected expenses or emergencies without going into debt. Ideally you should have 6 months worth of living expenses saved up in an emergency fund. In most cases this will sufficiently cover any unexpected events that would otherwise cause financial hardship for you and your family. Here are some examples of emergencies you should be prepared for:

• Losing your job
• Serious illness
• Car accident
• Divorce
• Emergency dental work

Achieve short term savings goals - Having an emergency fund in place permits allows you to focus your savings on other short term savings goals like saving for a down payment on a home, a family vacation in the sun or funding home renovation projects.

Importance of Saving Money - Long Term

Build wealth - Saving money for the long term is even more important than saving short term. This is mainly because over the long term is where all the wealth building happens. Your long term savings will directly affect your quality of life at retirement. This is how you will finance your goals and dreams to build your dream home or travel around the world when you retire.

Ask any "baby boomer" in Canada about the importance of saving money. In a recent Ipsos-Reid poll 81 % of boomers agreed that they wished they had started earlier, even in their teens, to save for retirement and 91 % agreed that having enough money for retirement requires a lot of planning and advice to reach your goals.

Why aren’t boomers on track with their retirement savings? Here are the top 5 reasons:

• No money left over to save (58%)
• Started saving too late (44%)
• Still supporting kids (28%)
• Health issues (22%)
• Job issues (20%)

* See the poll at Ipsos-na.com

Learn from the plight of the boomer generation and start saving now! Even if you're nearing retirement age yourself it's not too late - you will just need to work harder to catch up.

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