Truth be told there are advantages and disadvantages of saving money. So, before you determine your budget and start saving, check out what the effects of saving money and not saving money really are.
Advantages and Disadvantages of Saving Money
There are many reasons that saving money is a good thing. That shouldn’t surprise you. Chances are you have been told practically every single day of your life that you should be saving money.
But, it could be no one has ever told you why it is such a good idea.
Let’s check out why saving money is a good thing.
Advantages of Saving Money
Here are some of the top advantages of saving money.
1.It can help you prepare for things like medical expenses in the future.
The truth is, no one knows what is going to happen tomorrow.
So, saving money and having an emergency fund will make sure you can handle whatever comes your way even a medical emergency or the loss of a job.
Having emergency funds available to you is one of the best things you can do for yourself and your family.
2. It builds your character.
Saving money takes dedication and diligence. It forces you to live on what you earn and not fall into the trap of instant gratification.
And yes, that does build your character.
3. It helps you become more disciplined and responsible.
Trust me. When you start saving money on a regular basis, can pay your monthly bills on time, and have the cash in your savings account to put a down payment on your dream home, you will feel really good about yourself and how you are living your life.
4. It decreases stress.
Chances are, if you haven’t been saving money, then there are times you have felt stressed out.
I can understand this quite well as I have been there.
Before I turned my financial situation around, I had a lot of sleepless nights thinking about how I was going to pay the rent and my car payment.
While I am far from rich, I can now sleep peacefully knowing I can pay my bills and deal with an emergency.
5. You can plan for the future.
If you save money, you can buy a house, take a vacation, or visit a sick relative. Regardless of what future events you plan on and those you don’t, you will have the resources to deal with them.
However, saving money takes time and discipline that not everyone has, so here are the disadvantages of saving money.
Disadvantages of Saving Money
Surprisingly, there are some disadvantages that come from saving money.
1.You may get tired of putting off spending your money on a big item you really want.
You know the new iPhone is coming out in a couple of weeks, but it isn’t in your budget.
You may have to wait months or even a couple of years before you can get the new iPhone which, of course, won’t be new by the time you buy it.
I’m about two years behind the new phones, but it doesn’t really bother me.
2. It may cause you to become isolated as you stop going out with friends or family in order to save money.
If your friends are going out every weekend to have a good time and you’re sitting at home because you don’t want to spend money, then you can start feeling kind of left out.
The same goes for family. If your family is planning a trip or reunion, you may have to sit it out. That’s never a good feeling.
3. It takes a long time to save substantial amounts of money.
There is no instant gratification when it comes to saving money.
It can take years to see all your dedication pay off.
There will be moments when you feel none of it was worth it.
More Advantages of Savings
So, that was kind of a downer. Let’s see what other benefits come from saving money.
1.You enjoy the satisfaction of reaching a goal, knowing you accomplished what you set out to do.
There is nothing quite as nice as reaching a goal.
When you’ve created your plans and watched your personal savings grow over time, and your long-term savings are piling up, it is a great feeling.
2. It helps you establish good credit.
Saving money and paying your bills on time will help you create good credit.
That comes with all sorts of benefits. You can buy a car for less. You can get a lower interest rate on your mortgage.
You don’t have to worry about being turned down for a new job due to bad credit.
3. It gives you peace of mind because you know your finances are in order.
I’ve mentioned it before and I’ll mention it again.
Your life will be much less stressful and more fulfilling. Nothing you can buy is worth more than peace of mind. The bottom line is that people who save money enjoy a better quality of life.
More Downsides of Saving Money
If you save money, you’ve created a good habit that puts you into a better financial position in the future.
However, it can be difficult in the short term to save significant amounts of money. So, here are some additional disadvantages of saving money.
1.You may become bored or frustrated if your goal is too ambitious.
I know how it is.
When you decide to start saving money, you might start dreaming big.
That’s great, but if you dream too big, you may find that you get frustrated by your lack of progress and end up throwing your hands up in the air and thinking just forget about it.
I can’t do it.
So, keep your goals small and reasonable especially in the beginning.
As your savings grow, then you can dream a bit bigger without getting frustrated.
2. It can be a challenge to save money if you have low self-esteem.
It may seem strange, but if you have low esteem, you tend to doubt yourself.
So, if you decide you want to start saving and things don’t go well in the beginning, you may blame yourself and give up.
3. You may experience guilt if you have a lot of obligations but don’t feel motivated to do anything about the situation.
You might also feel guilt if you don’t meet your savings goals.
No one is perfect, and no matter your plans, you will fall short sometimes.
Life happens. You will just need to pick yourself up and start over again.
4. You may feel stressed out when friends or family spend their money carelessly.
Watching your friends and family enjoying their life without any regard for saving money or having savings accounts might make you question yourself and why you are working so hard trying to save money.
You might also feel a bit left out of the fun.
It can tax your determination and even strain relationships.
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Tips for Saving Money
Here are some tips for saving money:
- Cut down on your spending. You can even start by cutting back on small things like not buying a cup of coffee every day.
- Think about saving for something you really want. Picture your goal and write it down. It will make a big difference.
- Make a budget and stick to it.
Once you have the money allocated into the categories of your budget, then you will feel more satisfied with saving your money and not spending it on other things that aren’t important to you.
- Set up an emergency fund where you put in at least three to six months’ worth of expenses in savings. Start with an emergency fund.
It will take less time to save this money than it will for some major purchase. It will give you small wins sooner rather than later.
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To Sum it All Up:
There are advantages and disadvantages of saving money. In the long run, you’ll notice that most of the disadvantages deal with your emotions while the advantages can change your life for the better. The underlying lesson is to learn to deal with your negative emotions and you will be able to change your savings habits and your life.