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People save money for many reasons: rainy days, peace of mind, security, to make more money, to better manage money, to prevent debt…. Saving is more than just putting money aside in a cookie jar. A strategy that prioritizes the utility of spending, that maximizes on interest, and is accessible for future use is imperative.
Saving vs. Paying off Debt
Many people believe they should pay off debts first before starting a savings, but many financial experts disagree with this concept. It is very possible in this day and age that a person will always be in debt. As they pay off one debt, they often accrue another. Many times, debts are created as a result of life happening such as auto repairs, job loss, an opportunity, etc., debts of which could be prevented had a savings already been in effect. Add your savings to your list of debts as you already owe money to your future. Give yourself a minimum monthly fee to pay into that savings.
Creating a Plan
You want to determine exactly what are you saving for. Most financial experts recommend slowly first building an emergency savings equating at least 6 months of your current monthly income for emergency use. In addition, many save for short term use such as Christmas and vacation as well as long term savings such as retirement and children’s college funds. The types of accounts for saving are often best chosen based on how you intend to use that money in the future.
With strategy, determination and prioritizing your money into savings will benefit your overall financial peace of mind.