4 Things You Miss Out On When You Neglect To Save

It can be tempting to forego your savings account in favour of spending on entertainment and other fun non-essentials, but be warned: there’s a huge opportunity cost you face by neglecting to save. Here are four examples of privileges you’ll miss out on if you aren’t saving on a regular basis. 

1. Reaching large financial goals 

When it comes to large-scale financial goals, you won’t be able to achieve them without pursuing financial activities like saving and investing. Huge financial objectives, like a down payment on a home or your retirement, can’t be put on a credit card. To reach these milestones, you’ll need to acquire an amount of money that can’t be put away on a short-term basis. This is going to involve some diligent saving each time you get paid. 

Even if you plan to reach this type of goal primarily by investing instead of saving alone, you’ll still need to have a solid emergency fund put away to protect yourself in case the market takes a dip. You can easily get going by starting a new Saving Jar or joining a new Saving Challenge within QUBER. If you keep your mind on the prize, your saving efforts will eventually yield huge results for you, even when the end result seems impossibly far away. 

2. Peace of mind

One of the best parts of saving regularly? The peace of mind it provides. You can never really predict where life will take you, or more specifically, what unexpected expenses it’ll throw your way. Whether it be an emergency car repair or a sudden loss of income, it makes all the difference to be financially prepared. However, according to research from Banknote, most people are not: 56% of Americans can’t afford a $1000 emergency expense from their savings account. 

This kind of unpreparedness can have a serious impact on your well-being. Inevitably, if you don’t have any savings to fall back on, you’ll need to rely on high-interest debt to cover yourself in the immediate aftermath of a financial crisis. For most people, having little to no money in the bank and a growing amount of debt creates a feeling of stress and unease. This type of stress is not to be ignored: those who are dealing with financial stress are reported to be twice as likely to suffer from poor overall health and are four times as likely to suffer from sleep issues, headaches and other physical ailments.

This is where having an emergency fund comes into play. If you’ve got a pool of savings designated specifically for unexpected expenses, you’ll be ready when things don’t go as planned. Knowing that you’re prepared in case things don’t go your way can make a huge difference in reducing your daily financial stress levels and allow you to enjoy your life without an extra source of concern.  

3. Disciplined personal habits 

Most good things in life require a strong level of discipline. If you want to be physically fit, you’ve got to work out regularly and challenge yourself to get stronger. If you want strong relationships with your loved ones, you’ve got to put in effort to show them you care in a way that appeals to them. Your financial life is no different: if you want to achieve financial freedom, you’ve got to be disciplined about the way you manage your money.

When it comes to discipline in money management, saving is one of the practices that requires the most. When you don’t pay your bills on time, there are immediate consequences for it. However, when you don’t regularly save money, no one is coming to penalize you for it. This leaves how you manage your saving habits, for better or for worse, squarely in your hands. The tricky part is that a lack of discipline is a slippery slope. If you allow yourself to be lax about your saving habits, this might set the stage for other important habits to start slipping too.

If you find that you’re successful with staying disciplined in other areas of your life, like your work out regimen, apply the strategies and principles that keep you focused on that goal to your financial situation. For example, if you workout in the morning to avoid the chance you’ll lose motivation later in the day, think about how this could be applied to your money - you could be saving right when you get paid instead of leaving it until the end of your pay period and hoping there’s enough left over.

If you struggle with being disciplined, spend some time thinking about what might motivate you to stay focused on saving. First concentrate your efforts on making small changes, like making coffee at home instead of buying it, and staying consistent with them instead of trying to change up your entire lifestyle all at once. Being disciplined about your savings habits can be hard, but so is having little to nothing in your savings account. The outcome is worth the effort!

4. Opportunities to move up 

When you don’t save, it inevitably means you’re relying on credit on a regular basis. While you can get by this way, it can have some very negative consequences on your credit score. Experts suggest that if you’re regularly using more than 30% of your credit limit, credit reporting bureaus will take that into account and reduce your credit score accordingly. 

Letting your credit score decrease can have some real impacts on your life, even if you can’t foresee how it’ll affect you in the present. For example, let’s say you find your dream apartment in a few years. Even if you can afford the rent, you may still get turned down based on your credit score - the landlord may not trust your ability to pay rent based on what they see when they check your credit report. Or, you may decide to finance a car loan some day. But, if your credit score is below average, the interest rate on the loan you’ll be offered may be a percentage point or two higher than one that someone with an excellent credit score would receive. This will end up costing you hundreds, if not thousands, in extra dollars spent on interest over the lifetime of the loan. 

With this in mind, save money! Being able to cover your expenses with liquid cash instead of your credit card will mean that your credit score will stay in tip-top shape. You won’t miss out on future opportunities because of poor spending habits you had in the past.