Having savings has changed my life.
That’s a big thing to say I know, but it’s probably been one of the most important things I’ve done in the last 5 years – that and getting debt free ☺
It took a conversation with a friend earlier this week to remind me of how powerful having savings is and I therefore thought it was worth a few words here.
First of all, if you’re not debt free (not including a mortgage) it should probably be one of the most important things in your life right now. Do whatever it takes – ruthlessly cut back on outgoings and hustle like hell to bring in as much income as possible. Once you reach debt free status, it’s an amazing feeling.
Once you’re debt free, building a solid set of savings should be one of the next most important things in your life and the best thing is that it’s not that hard, it just requires more time and patience. All you have to do is repeat the formula that got you out of debt – essentially more income than outgoings.
I’d say a good goal is to have 6 months salary in the bank – enough to get by for 6-9 months if you found yourself out of work. 12 months salary is a very decent number to have.
Why is having savings so important?
Firstly you just stop worrying about something out of the blue happening e.g. losing your job, an unexpected high bill etc.
Secondly if something unexpected does happen, you have the ability to deal with it head on and not be knocked for six. You can handle it in your stride and make much better decisions when you don’t have the financial burden weighing down on you.
Thirdly it gives you ultimate power and freedom of choice. You can take a break from your career any time you want – you can treat yourself to something out of the ordinary – you can be generous to your friends, family, good causes or even strangers – you can make decisions on the direction of your life etc. Too often people are limited in the decisions in their life as they are restricted financially.
I cold go on for ages about this topic, but I’ll stop there. If you have any questions about anything getting out of debt / saving related, just post a comment and I will answer it.
I want to thank @Paul_Stagg for his advice on this some years ago. He said something and it stuck with me and ever since that day I made being debt free and having savings one of the most important things in my life.
P.S If you get really good at saving, you can have a phone like this: