Why save money?
There are plenty reasons to save money. If you’ve been lucky enough to get by without having to save, you should start saving before that luck runs out and you find yourself in a bind. Here are a few reasons why you should save money:
It’s would be smart to put away some money each month just in case something does happen. When your car needs repairs or extra maintenance, then you won’t have to worry where that money comes from. If you incur any medical bills or if you’re mother becomes ill, you’ll have the money to do whatever you need to do. An emergency fund prepares you for the unexpected.
With the never ending inflation of college tuition, it’s imperative that parents start saving for their kid’s education as soon as they are born. 529s are great way start saving for your child’s education. They gain interest and offer wonderful tax breaks as long as the money is used for its attended purpose. If your child decides not to go to college, you can switch the account to a sibling. However, if you want to use the money for something else, then you will be charged back interest along with a 10% penalty fee.
A Coverdell Education Savings Account is another way to start saving. It is quite similar to an IRA and the investments aren’t as limited as a 529 plan. As far as tax breaks, it works the same as a 529. If you’re not comfortable with using stocks and bonds at all, then the Gerber Life College Plan is more for you. It works as an endowment. Once your child becomes of college age, you’ll receive $10,000 to $150,000 for your child’s education. It’s guaranteed to be greater than the premiums you paid. There’s no risk involved. If your child decides not to go to college, you still receive full benefits and you are free to use the money as you please. One of the downsides is that you don’t receive the same tax breaks as a 529 or with the Cordell Education Savings Account. Do your research and see which one is the best for you. If you don’t have any kids, you may still need to save money for your education. Later in life, you might decide to go back and finish that degree. More and more people are going back to school get their master’s or doctorate degree. It’s nice to have that option.
We don’t know if social security is going to be around once we reach retirement age. It’s always good to start saving for retirement especially at a young age. You want to be able to pay all your bills as well as for many vacations once you get older. There are also tax breaks for contributing to a 401k or an IRA.
One day you’re going to want to buy a house which requires a significant down payment. If you ever want to move out of your apartment, then you have to start saving. Tired of driving around in a bucket? Most creditors require a 20% down payment. Better yet, save money on finance charges by paying for the car in full. If you ever go on vacation, then you need to have some money saved. Not to mention, you have to save for weddings, honeymoons, new additions to the family, and everything else in life. Why not save money?