If something happens and you don’t have a leg to stand on, (such as you have completed a business deal that went sour, or you lost your job, etc.) you need money in your pocket to pay for your basic expenses.
Saving money is also important because it enables you to achieve long-term goals, and it allows you to take advantage of opportunities that would otherwise be seen as “if you want it, then you can’t afford it.”
Saving money is also important because it enables investment of the surplus money you have in the account in order to make more money, thereby letting your money work for you. And, ultimately, saving money is important because you get to enjoy more of what you like, and your life is more enjoyable.
But, if we look at it a little more closely, there is a much more subtle reason for saving money that most people don’t realize. And, it is a reason that involves your most valuable possession, your house.
Most people find it hard to pay their mortgages every month, and they wonder if they are even making a dent in their principle. The big problem is that they don’t realize how much money they are losing due to compound interest every month.
For example, if your monthly mortgage payment was $1,000 and compound interest was running at say, 12% each month, you would be paying $1,000 – $1,200 in interest per year. Over the course of 20 years, that’s equal almost $50,000!
By taking innumerable such steps, you can transform your life and make your money work for you so that it can become a reliable source of income that will take your on-again life and enable you to achieve your goals, whether they are long-term or just short-term.
But, while saving money is necessary, it is not the top most goal you should have in life. Yes, saving money is the most important thing you should have in your saving money basket, but it is not the completion of your task.
There is something else that is very important, and that is the complete understanding of how your money works so that you can make it grow. If you want to become rich through saving money, you need to understand how money works, and how you can make your money work hard for you.
Knowing how money works is so important because that is the thing that will transform your life. To become rich, you must have a big picture of how money works in YOUR life. You can get this picture from books written by rich people, such as Warren Buffett, or from people who have become rich, such as Donald Trump, Jane gauge, or Bill Gates.
Knowing the important things about money is sometimes all you need to take the first step to become rich. Making your money work for you is the most important part of accumulating wealth.
So, you now know the importance of saving money, but you may still wonder: If I know all this, why do I still struggle financially? The answer is very simple. Most people have trouble generating an income because they don’t understand how money works. They may have tried to solve the problem by getting a second job, or working overtime, but none of these has been a consistentsufficient financial success.
So, the lesson is that, you need to know something about money to become wealthy. Once you have this knowledge, your future will become much easier to manage. So ask yourself: what are you doing that you don’t know?