The Benefits of Saving

Life is uncertain. People save primarily because of the inherent uncertainty about the opportunities and threats that they face or could face in the present and future.

The benefits of saving (setting aside money for future use) arise because saving allows us to take advantage of opportunities and mitigate threats. Beyond that, saving is a fundamental financial activity that promotes sustainable living. There is a plethora of benefits and merits of saving that ultimately improves the quality of our lives.

Saving reduces risk

Saving is self-insurance against life’s uncertainties. Typically, your life span is unknown, you may have unforeseen expenses or urgent needs and opportunities that arise from time to time. Saving has all the benefits of a good insurance plan- it prepares you for any eventuality and gives you peace of mind. Whether it is the risk of outliving your savings or covering the immediate final expenses of a loved one, saving is provident. It does not protect you from life’s vicissitudes but it surely prepares you for them.

Increased options and choices

The power to choose is one of the greatest powers you can have. There is a positive relationship between saving and choices. You may suddenly need to upgrade your career skills or take advantage of a low price on stock or real estate. If you do not have the savings, it would hamper your chances of taking advantage of any opportunities that arise. Even lenders feel more comfortable with savers than spenders anyway- yet another benefit of saving.

Eliminates or reduces unnecessary or bad debt

Saving is a wealth accumulating activity. Unnecessary or bad debt handicaps your wealth by handicapping your wealth accumulation. Since saving has the opposite effect, it can help you to reduce your good debt and eliminate unnecessary or bad ones. When you save enough, you have a reduced dependence of credit card facilities for minor expenses, can afford more in the future and have more to eliminate your debt balance. Debt puts a lien on your assets and even your income! Saving is the force and habit that counteracts bad debt.

Sustainable living: Saving helps you to live within your means

Living within your means is a critical benefit of saving. Saving enough enables you to maintain your standard of living and reduces profligate spending by disposable-income reduction. The effect this has on your life can go beyond the financial realm. When you have a sustainable lifestyle, you feel in control of your life and destiny.

Asset creation, accumulation and maintenance

You can only accumulate wealth if you spend less than you earn. Saving not only helps you to spend less. It automatically sets your wealth aside for future use. Developing your cash reserves may also lead to asset acquisition later on. Through saving, you may also develop a pool of funds that enables you to invest without compromising your cash reserves.

Enables financial planning

Saving for retirement, estate planning, protecting and developing your assets are all integral dimensions of financial planning. Without saving, you would not be planning for retirement- you will be working until you drop- literally. Inadequate or no savings suggest that you have no assets to protect or no extra money to protect the assets that you have. The cushion normally provided by emergency funds would be rock hard if you cannot save enough toward it. Without saving, financial planning is superfluous.

Have money working for you

There are two primary sources of income- men at work and money at work. When you save, you can have the best of both worlds. You take your income and convert part of it to a pool of funds that works for you. That pool of funds generates interest that increases your income- especially if you save in high-yield savings accounts. When you have money working against you, you deplete your income to pay for low-value assets or intangibles. When you have money working for you, you increase your income.


Saving empowers you and allows you to grasp opportunities and deal with the unexpected better. When you save more, you magnify and compound the benefits of saving. Would you prefer to be benefit-laden or benefit-free?