Saving money brings enormous benefits to consumers both financially and psychologically. It allows consumers to raise their credit score and thus borrow money at cheaper rates, and to feel more empowered over their lifestyle. Understanding personal finance is a very important aspect of saving money.
Given massive credit expansion in recent decades, the economy has grown at a very fast rate and allowed consumers to live beyond their means. While wages have stagnated or dropped in terms of purchasing power, borrowed money, largely from credit cards, has compensated for this drop and given many people the notion that easy money will continue indefinitely. If enough people begin to default, which happens when credit comes easy for a prolonged period, interest rates will rise. Higher interest rates increase the cost of living for consumers, and, consequently, their quality of life will drop.
Creditors are able to share information with one another on the creditworthiness of individuals, and such reports will impact the interest rates that creditors will charge to individuals. Having a high credit score, due to avoiding debt or living within one’s means, can thus save an individual many thousands of dollars over his or her lifetime due to lower interest rates on loans. These savings can then be used for vacations or things which savers prefer, as opposed to paying interest from debt.
Importantly, saving money as opposed to borrowing money gives consumers a sense of freedom that cannot be valued in dollar amounts. Savers do not have to worry about their property or wages being taken away, and can live at ease in knowing that if an emergency ever arises, they will have funds to cover it. Living within one’s means and saving can thus prevent a person from experiencing undue stress, which may cost a person his or her health. Maybe try easy access savings accounts when you start thinking about it. Health that deteriorates due to stress can be very costly for individuals, especially as health care costs are rising much faster than general inflation, which is already high.
Individuals are not the only ones saving money though! Companies are doing it too and using even more creative methods to do so. One such new idea is BYOD or “bring your own work device.” Through increasing the freedom of employees, companies are allowing greater and greater freedom so their employees can achieve higher efficiency and productivity. Allstream’s BYOD Program is an example of this new idea of thinking.
Saving money can also allow a person to build a solid investment portfolio over a period of time, and can make the difference between living a life barely above poverty and achieving a higher level of socioeconomic status. When it comes to investing, money creates more money. When a person is drowning in debt, it may be impossible to invest.
It is therefore important to buck the trend of borrowing and instead save to preserve one’s freedom and dignity, and possibly to substantially build one’s wealth over a lifetime. In the long run, saving will lower the cost of living and allow a person to experience more of life’s luxuries as a result. If you end up looking into savings accounts, check out BM Savings.