Saving is a crucial ingredient necessary for successful realization of your financial plan. Financial plan can not be made alive or implemented if it is not backed up with savings. Efficient financial plan is comprised of the following main components: planning, goal setting, saving, investing, and multiplying your money. These components work in combination in order to achieve the desired effect.
Below listed are reasons why saving money is crucial to effective financial planning.
1. Realization of your financial goals is directly dependent upon your ability to save up money
Without getting into the habit of saving, you will become too dependent on your next paycheck. You will be more likely to get into debt that is an obstacle to achieving success in the business realm. Accumulated money in your savings account will help you realize your financial goals. The more money you are able to save up, the more successful you will be in realizing your financial goals. Once you are able to save a significant amount of money, you could make a down payment on your house.
2. It will help you achieve financial independence in life
It does not help if you earn high income if you do not pay sufficient attention to saving, investing and multiplying your money. Your income can cover for your basic needs but it is not sufficient to help you become financially independent in life. Saving money helps you achieve financial independence and a peace of mind that comes with it. Contrary to the popular beliefs, millionaire is not somebody with an extravagant lifestyle, a luxury car, and a castle house, but just an ordinary guy who lives way below his means, saves his money and invests it in order to multiply it.
3. Saved up money is a prerequisite for investment
You can not possibly invest if you are in loans up to your throat. You need to have fresh capital in order to be able to invest and multiply your money. If you manage to save a significant amount of money, you can always invest it into real estate property as its value will increase over time. You can always rent a part of your house and earn passive income of off it. Thus, you will manage to diversify your sources of income which is key for survival in today’s insecure time. It is a well known fact that rich people made most of their wealth by investing into real estate property.
4. Saved up money serves as the security blanket in today’s insecure times
We are living in uncertain times where we are faced with numerous layoffs on a daily basis. Living from paycheck to paycheck without any savings is simply disastrous for you especially in today’s time of volatile economy. What if you lost your job, had a death emergency in your family, or lost your home? Saved up money can help you start off a home based business of your choice and thus provide for your basic needs.