Why Should You Start Saving Early?

Wahed Editors

 

A comprehensive guide for your Twenties

The way you view money and your spending habits when you are still young define your financial health for the future. Young people who start saving early, have a sense of preparedness. This security helps them deal with any eventuality that may come unannounced. Early savers pave the way to worry-free and flexible life and have the following options available to them:

Live your dreams

If there is a sizable amount of money in the bank account, then it is easy to live your dreams. Whether it is a short sabbatical between jobs, a month-long backpacking tour in Europe or a book writing workshop by your favourite author. Saving help you maximize your life goals.

Finance your education

The coveted MBA at the Ivy league becomes accessible despite its hefty fee simply because you have enough to cover part of the costs, thus making your goals more realistic and achievable without taking on a hefty student loan.

Preparedness

Your twenties when you get a first taste of being independent and an adult. Therefore it is imperative to be prepared for all of life’s twists and turns. A sound financial backing helps you in case of any eventuality- especially related to health or family emergencies.

 

Wealth multiplication via Interest

Even if you start small but regularly via a sound banking instrument, over a period of time your wealth will multiply. This is the simplest way for you to start your journey towards a solid financial future.

 

 

 

 

 

 

Increased risk-taking appetite

With wealth comes financial freedom and an increased risk-taking appetite. For example, an unexpected layoff can turn into a blessing when you take time to chart your next steps instead of rushing into a new job because you have bills to pay. An entrepreneurial appetite can be satiated even though you don’t have a monthly income, thanks to the wise investments from your twenties.

As you can see, the merits of saving in your twenties are immense. You can start small and reap big advantages at a later stage. You can follow these suggestions to start your journey towards an early savings plan:

 

Running on a budget

Curtailing small, unnecessary expenses can save a lot of money. Therefore a monthly budget is crucial. It’s an important way of saving where you can account for all your expenditure versus your income. There are many apps freely available that make this exercise less tedious and easy to follow.

 

Small is powerful

Small saving plans are the key to start this journey. Recurring deposits (RDs) are great to start small but regular savings each month.

 

Setting short term and long term saving goals 

Short term goals are within 6-12 months with the goal to save for an emergency. Ideally, this should include a minimum of 3 month’s living expenses along with some miscellaneous expenses that are accounted for. Long-term saving goals are between 1-5 years and could be saving money for a wedding, vehicle, education, down-payment for a house etc. If you are dreaming of an early retirement, then your savings should begin in the early 20s.

It’s time you start viewing your money differently. It’s time you start thinking of financial health.

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