It is possible to earn monumental amounts of money and still end up having nothing saved. Sometimes, the problem isn’t caused by how much money is made. Instead, it’s due to the misguided purchases. Regardless, here are 10 important things to save for in life that really matter.
A striking report on consumer habits reveals that an average American adult spends about $1,497 on nonessential items. Calculating this, that’s about $18,000 a year! Most of us might think this is absurd, though we are prone to spending good money on bad things.
10 Things to Save Up For
Before thinking about getting that limited edition bag or sneaker, here are the 10 things to save up for. This list contains purchases that exist to make the future easier money-wise. All of these are worth our patience and hard work, making it something that should be held top priority.
1. Housing
Saving up for a house is among the most demanding challenges an adult will experience. When planning to get a place, a person is also responsible for saving up for the down payment, maintenance, and miscellaneous fees. Unfortunately, all these don’t come with affordability.
Not to mention, there are also closing and customization fees that need to be paid when deciding to get our own space. People should expect these responsibilities to pile over the years. This is why “house bills” are written in the plural for a reason. Aside from getting the house, it’s also our responsibility to preserve and maintain its integrity.
Looking at it from a single angle, it seems like getting a house does more damage than good. However, this isn’t really the case. Getting our own place is a lifetime investment and a human necessity that’s worth every penny.
A house is a space where we can rest, celebrate, and experience life with privacy and comfort. Plus, it can even be a profitable financial asset over time.
In saving up for a house, it’s good to begin as early as possible. The most common practice in money-saving is the 50-30-20 Rule. This technique suggests that people should automatically save 30% or 20% of their earnings in whatever milestone they’re trying to achieve.
For housing, saving up 30% is a sensible decision. Housing is the priciest purchase in this list’s top 10 things to save for in life. So, it’s wise to push as hard as possible to have more cash reserve. Also, always keep in mind to never buy a house unprepared as this will result in more loans and interest fees.
2. Career
We owe it to our careers in generating income. Obviously, no person can save the money they don’t have. This is why spending money to improve our skill sets, devices, experience, and education should never be neglected. The more attention we set for our careers, the better opportunities we can unlock.
There’s no “one-size-fits-all” in saving money for our profession. As unfair as it may sound, other careers aren’t as financially-demanding as the others. Doctors need to spend hundreds of thousands for their degrees, artists need their own studio, athletes can’t compete without sufficient physical training and gear, etc.
The point is that people should invest in themselves. It doesn’t have to be as expensive as a full studio room. Any purchase that can make our jobs faster and easier is already an excellent investment in our careers.
A simple laptop upgrade or a better running shoe might advance us to better financial heights. So, it’s advantageous to keep these in mind before saying that a costly bill for one’s mastery in their craft is a “waste.”
3. Medical Fees
The United States citizens have the reputation of sharing the most expensive healthcare system in the world. An average cost of $190 is billed out to patients for a medical consultation. And if there’s one thing all of us can agree on, it’s that hospital bills are insanely burdensome for the body and the bank.
Because of this, we need to prioritize future medical fees whenever we get the chance. The inevitable truth will always prevail that the older our bodies get, the easier we’re prone to sickness. Clearly, we wouldn’t want to stress over money matters during recovery.
A less taxing way in preparation for expensive medical bills can be done by saving at least 5% of one’s monthly income. Since sickness or other health-related problems are unpredictable, setting higher percentages for health bills can be a literal lifesaver.
And remember, health-related problems occur to everyone. Knowing that we have a backup stash if something goes wrong is reassuring. However, the extra money can also save our loved ones from similar events.
We can protect our bodies by staying safe and healthy, and we can protect our finances by being ready.
4. Debt
Alarmingly, the American household debt sums to a shocking $14.6 trillion in 2021. Never have we seen household debt grow exponentially over time. Although it’s easy to just tell people to stop getting themselves into debt, it’s nearly impossible for most of us.
Sometimes, there will be circumstances that will urge people to file for a loan. The only difference is that others are more organized in handling their financial responsibilities. So, a helpful tip anyone can follow is to save money for future debts.
First of all, doing this is similar to opening an emergency fund. Only that, its primary purpose is to help pay loans faster or even prevent one from filing it in the first place. A common problem with debt is the interest fees. So, having a cash reserve just in case these fees spike up can help big time.
Despite not having outstanding debt, doing this is the best way to prepare for it. Loans pile up swiftly in overwhelming numbers. And as always, preparation is better than neglect.
5. Emergency Funds
Emergency funds mark less pressure among the other items in this list of 10 things to save for in life. Nevertheless, these don’t make them less helpful or essential. In fact, the money we allot for emergency funds can be the most solid line of protection in times of financial adversity.
We can use emergency funds in extreme cases like massive economic inflation, career changes, calamities, damages, and loans. Speaking of loans, emergency funds can also act as a safety line that people can use to avoid getting themselves in debt.
There’s less pressure in saving up for emergency funds because there’s no limit to how much we should save for it. Unlike housing or education fees, we can’t exactly pinpoint how much we need for emergencies. Of course, the more money we save, the easier our future will be.
It’s advisable to save at least 10% to 20% for emergency funds. These types of savings benefit more from consistency than the actual amount. So whenever there’s spare change, do consider reserving it for emergency funds.
6. Investments
James Altucher describes investments as “wealth preservation” rather than “wealth creation.” This is a financial truth every person should know. See, we can’t always rely on our bodies, careers, and even the economy to safeguard our cash flow. To preserve money, we need to find a way to do it passively. This is what investments are for.
Investing in index funds, bond funds, stocks, or other ETFs can help multiply the money we put in. Without doing anything, we’ll end up gaining more returns from the money we saved. This is extremely helpful in our finances as we can’t always have the condition to work 24/7.
Other than that, investments can still be used to create wealth. So, keeping a stash saved for investments is like growing a seed made from money. When the time is right, selling the purchased assets can protect us from losses and other economic adversities.
The rule of thumb in investing is to do it now. Investments are a play in time. So, the more time the bulk quantity has to grow, the higher amount we receive.
7. Retirement
While Social Security does an excellent job supporting retirees, we can’t entirely depend on them. In fact, we can’t rely on most things like our jobs and even our bodies. So when the time arrives, and we’re sure that we no longer want to work, we want to prepare as much money as possible.
The truth is, retirement is expensive. When people no longer have access to monthly payments or bonuses, we can expect them to worry about money. This is why we need sufficient cash to support us after deciding to slow down.
Retirement means saving money for house bills, medical bills, maintenance, recreation, investments, and many more. Without the constant paycheck or a good retirement plan, having these responsibilities can be excruciatingly stressful.
The point of retiring is to finally enjoy our lives after working hard for years. And having no money left after retirement robs us of this stress-free joy. So again, save up for retirement as early and as frequent as possible.
8. Transportation
It’s no surprise that cars are expensive. And it’s not just the car itself. There’s also the down payment, insurance, maintenance, and miscellaneous fees that come with it. Still, buying a vehicle is a good investment for many people, especially families.
Having a personal mode of transportation can save not only time, but also money from commuting daily. The list goes on in how cars can generally make one’s life easier. Then again, the not-so-easy part of getting one is paying and maintaining it.
Setting small amounts is productive like anything in this list of 10 things to save for in life. The only difference is that cars need more assessment than other purchases. Make sure to get a vehicle one can pay off before and after purchase.
Sustainability is the most critical factor in buying a car. We don’t want our modes of transportation to be our liability in the long run. Maintaining an expensive car might cost more than buying it. So, getting one below the budget is a smart move since all vehicles are built to drive after all.
9. Insurance and Maintenance Fees
Many of us fail to remember how our purchases branch to more purchases. Buying something means buying more things to retain its quality. There’s nothing we can do to stop this cycle.
However, we can prepare ourselves and save for it. This way, we’ll end up having less stress and more money to back us up. Customers are responsible for taking care of whatever it is they bought.
This means renovations, insurance, and other hidden fees for houses and cars. And for gadgets, this could mean getting software upgrades, repairs, and accessories. Saving space for some money to pay for these hidden fees can make life easier.
Not only will we be able to pay it as soon as possible, but we can also prevent ourselves from debt. When people face situations where the hidden fees are above their expectations, they tend to panic and apply for loans. So, keeping spare money for this purpose is a must-do.
10. Happiness
The most underrated and vital investment people forget is no other than happiness. Sure, we can save hundreds of dollars for everything on this list. Still, the value of all these efforts will be pointless without considering happiness.
We save money for happiness and security. Thus, excessively fixating on security without joy will deteriorate the value of earning and saving money. As long as there’s moderation, don’t feel guilty spending on things that induce happiness. May it is vacations, good clothes, or yummy meals, balance is still key.
Whenever we have extra cash and no urgent financial tasks, go out once in a while and enjoy the fruit of one’s labor.
The Art of Saving Money
Truth be told, these 10 things to save for in life are mere suggestions of well-thought purchases. These ideas are only roadmaps that can help us choose where to spend our money in a way that benefits us most. However, the art of saving money mainly relies on our thought process.
Below are some thought process recommendations to help us grow our finances most effectively and sustainably as possible.
1. Reason
Humans are driven by reason. And without it, it’s easy to lose track of our goals. We shouldn’t mindlessly save money without explanation. Determining specific elements like why we’re doing it, who we are doing it for, and why we should keep doing it will inspire us to do better.
These might feel superficial for some, but it has been proven that attaching hard work to a reason leads to more success.
2. Patience
It’s tempting to check our savings every five minutes to see if it magically grew overnight. This can be harmful when our lack of patience demotivates us. Monitoring progress every now and then is advisable. However, constantly obsessing over the numbers can tire our focus and motivation.
Saving money for the future is a lifetime process. It shouldn’t feel like a constant weighing competition for cash.
3. Discipline
This virtue is obviously going to be included. We all know we have to be disciplined. We all understand that we need it, though not everybody can apply it. The secret behind learning discipline is simply taking action.
We can’t focus on something that doesn’t exist yet. So, if we have zero savings for the moment, it feels impossible to discipline ourselves and work our way to $100. However, if we start saving $10 per week, we wake up reaching our goal and realize that we unintentionally mastered discipline.
We can’t force discipline to appear out of nowhere. Polishing our habits little by little will teach us how easy obtaining this virtue really is. It’s not magic. It’s just the minor decisions that form major habits.
4. The Present
With so many suggestions on where to put our money, feeling conflicted is normal. To determine which area needs more attention, we must shift our focus to which option is more urgent. For high school students, saving up for a house seems less unimportant than college fees.
Don’t try to meet all areas at once. This can easily overwhelm and disappoint us since it can make progress feel too minimal. To get around this concept, try focusing on only two or three areas at a time. After hitting a goal, a person can shift their focus to something else.
5. The Big Picture
The hardest part of saving money is training ourselves to stray away from temptations. Our brains can sometimes convince us to desire things we don’t need. To avoid this, we need to criticize the product’s value in the big picture. Don’t assess it by quality or reputation.
Instead, it’s wise to ask ourselves the contributions a purchase can give us. For example, is that espresso machine still functional after two years? Or would a person still want the $300-worth bag they bought after six months?
When we begin assessing the value of things based on its consequence, saving for the future becomes automatic.
6. Sustainability and Lifestyle
There’s no universal mold that can suit everyone’s budget. When saving, don’t divide cash too much to an extent where everyday living is hard. We should only save in a manner our lifestyles can sustain. As humans, we need to use the money for food, water, sanitation, etc.
Perhaps 20% or 30% is an excellent place to begin. Don’t feel pressured by other people’s savings. Another person’s 20% could amount to another person’s 5%. Assessing our lifestyles before making decisions is the best way to take care of them.
The usage of savings apps or applications can really help to stay on track with some specific percentage goal every month or year. You might consider one or develop your very own.
The future is fascinating to think about. We have to conquer it with optimism and preparedness despite all the unpredictability. People can’t control the future or predict what the outcomes will be.
This doesn’t mean that we don’t have the power to make it easier when the time arrives. Saving money can be tiresome or stressful. Yet, the stability it offers is irreplaceable.
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