Why Is It Important To Save Money In 2024? 5 Reasons (2024)

If you’re like most Americans, you probably try to save money. Most financial advisors cite retirement and emergency funds as the primary reasons to save. But it can be challenging to set aside money for future events that seem abstract, especially when current bills and expenses require your attention. Clarifying why you want to save is essential.

Here’s why you should save money this year. Start with one reason and use it as your motivation to keep going.

Why Is It Important To Save Money?

As you consider reasons to save money, be specific about how savings can impact your life. Recent research from the American Psychological Association shows it’s crucial to find a reason to save that matches your personality traits and priorities instead of adhering to generic goals. That said, here are some common reasons to consider.

1. Meet Life Goals

Whether you’ve always dreamed of buying a house, purchasing your dream car or sending your kids to college with all expenses paid, saving money allows you to reach your life goals. These are often medium- and long-term goals that take multiple years to achieve, and that’s where savings can help.

2. Handle Unexpected Expenses

If you’re not prepared with savings, an already stressful event can worsen as you scramble to pay for it. Some unexpected expenses are relatively small—a flat tire, broken appliance or high utility bill. But other expenses like a new roof or a surprising move can cost thousands of dollars. If you have savings, you can focus on fixing the problem instead of how to pay for it.

3. Reduce Your Stress

It’s never fun to calculate whether you can afford a bill, say yes to extracurricular activities for your kids or join friends for dinner. But if you don’t have savings, you might find yourself trying to figure out if you can pay for expenses more than you care to admit. Savings can reduce your stress and allow you to enjoy life more.

4. Prepare for the Future

It’s tough to predict what the future holds. Even if you know what you want the next few years to look like, it may not pan out as you envision. Or your plans might change. Either way, savings allow you to prepare for the future and give your future self the gift of choice.

5. Career Flexibility

Whether you love your current career, hate it or fall somewhere in between, savings allows you flexibility in your career trajectory. Savings can help if you need to retire earlier than planned, go part-time, take a break or find a new role due to lay-offs. It’s yet another way you can quickly pivot and handle unforeseen events.

Why Is It So Hard To Save Money?

Even if you’re committed to saving money, it can be challenging to do so. Factors like competing expenses, increased costs, stagnant wages and the pull of instant gratification make it hard to save money.

If you feel like it’s hard to save money, you’re not alone. According to a recent study from the Pew Research Center, 63% of Americans say they don’t save enough money, even though 77% report they always try to save.

Even though some of the obstacles are out of your control, it is possible to make progress.

How To Save Money

If you’re ready to get serious about your savings or supercharge your current savings efforts, there are some steps you can take. Plus, it doesn’t have to be as complicated as you think.

1. Start Small

You don’t need to save hundreds or thousands of dollars each paycheck to make a difference in your finances. You can start small and build your savings over time. You can also gradually increase the amount yous ave each month as you adjust to your new budget. You could start with $10 for a few months and then increase the amount to $20 and then $30. It’s also okay to skip a month or two due to unexpected expenses. Eventually, you’ll be able to pay for those with your savings.

2. Use Found Money

There might be times throughout the year when you receive unexpected money. It could be a third paycheck one month, a tax refund, a performance bonus at work or a birthday gift. If you ever find yourself with unexpected money, save it. You could also use a certain percentage, like 10% or 20%, for fun and save the rest. It can be an easy way to save extra because it doesn’t impact your monthly budget.

3. Automate Your Savings

When you automate your savings, a portion of your income is automatically deducted from your bank account and set aside in a separate savings account. Automation can be a helpful way to increase your savings because you don’t have to remember to set money aside. Plus, you can schedule the transfer at the beginning of the month instead of the end to ensure you save. There are also apps and other tools that can help automate your savings.

4. Review Your Expenses

It can be challenging to reduce your spending, especially if you barely have enough to pay your current bills. But you might be surprised by the expenses you pay for but no longer need. When you audit your savings, you could find streaming services you don’t use, free trials you now pay for and other expenses you don’t want or need. Once you identify and eliminate the costs, you can set aside that money in a high-yield savings account instead.