Savings are Vital

Saving is vital for future happiness. A credit hungry culture encourages spending money which we don’t have. Putting aside money for those little emergencies, which inevitably crop up, is necessary to avoid debt. Mortgages, university fees, retirement, and luxury holidays have to be paid for one way or another. Saving for these will provide financial peace of mind. With no savings you will be building a mountain of debt for many years to come.

One of the major financial commitments in life is sending children to University. College fees, accommodation, and incidental expenses, soon mount up. Student loans are available, but are responsible for burdening children with debt before they’ve even started employment. The more you can fund your child through college, the better start they will have in life. However, doing this through credit and loan facilities will only transfer the debt from the child to the parent. Saving as much as possible for this eventuality is by far the better option.

For some people, travel is the top priority. For the large majority who don’t wish to camp this means paying for hotel accommodation. Along with the expense of the room, the necessity of eating out and travelling by hire car, or public transport, means costs soon sky-rocket. Using credit or loans for vacations will build your debt faster than anything else. Try and put some cash aside each month to pay for these luxuries.

Nobody can go through life without coming across expensive emergencies once in a while. When your car breaks down, your roof starts to leak, or your appliances fail, repairs or replacements must be paid for. If insurance doesn’t cover the costs, and no spare cash is available, the natural reaction is to turn to credit cards or personal loans. With loan repayments costing around three times the original price, and credit cards running at an average of 17% interest per year, this is an expensive way to deal with emergencies. Yet there is often no option, unless you have saved for ‘that rainy day’.

Relying on credit is the road to ruin. Statistically, the repayment on an ordinary personal loan over 5 to 10 years will total around three times the original amount borrowed. When it comes to credit cards the typical interest rate is around 17%. If a holder spends up to the credit limit on the card it can be surprising how long it takes to pay off. For instance, if a card has a 5,000 limit, and the holder pays around a 150 minimum payment each month, it would take 259 payments to clear the card, even without any extra credit being added. That’s more than twenty one and a half years. In most cases, the item bought will have broken and been replaced by the time it’s been paid for.

The financial industry would like to convince us that paying for everything by credit is the sensible way forward. We’re bombarded by advert after advert about the flexibility and simplicity of using credit cards. The only thing a credit card is guaranteed to do is make sure you are in debt for many years to come. Saving before buying is the only sensible option.

Beside the need to save for things we wish to buy, saving is also vital in the event that anything should happen to your income. If, as is ever more likely in these dark times, your job should disappear and you are made redundant, you need to consider the financial implications. Without an income it becomes almost impossible to pay mortgages or rent, household bills, or loan repayments. If you already have piles of debt, it won’t be long before you find yourself completely bogged down with repayments you can’t afford. Savings are the only lifeline in these situations.

Then of course come the golden years of your life. Everybody has their favorite vision of retirement; those long days where employment is a forgotten memory, where you can do what you like, when you like, and life is easy. Unfortunately a lack of savings often results in the necessity of a part time job in the twilight years, just to top up pensions. When people should be enjoying life, they have to work until they are no longer able to continue. These are the fruits of a life lived on credit. Savings are vital to fund your retirement dreams.

Nobody wants to face a future full of hard labor and financial struggles. Most people dream of wealth and good living. Unfortunately the best things in life have to be paid for. For the majority this will mean either saving or paying on credit; heaven and hell. Relying on credit can only put off the inevitable. It is a shackle of shocking proportions that can only weigh you down. The only sensible way to a fulfilling life is to save. Saving is vital to your future happiness.

Sources: it-card-debt/credit-card