1. Emergency Needs. Resorting to credit whenever an emergency arise is a situation you must avoid at all cost. While credit services are routinely offered by bank and financial institutions, this often works to their advantage and against yours. You will end up paying for more than what you really spent because of interest payment and other finance charges.
So do not get swayed by ads saying you can lean on the banks for your emergency needs. In these times of financial turmoil, they bank on your propensity to borrow on future income for their profits.
2. Retirement Needs. The sooner you start saving for your retirement, the less you need to save enough to cover your retirement needs. As you contribute each month to such funds, the interest earned for the money advanced should help cover for the extra retirement money you will need or want in the future.
It is always advisable to contribute at least ten to fifteen percent of your income to retirement savings, and to do this as early as possible when you do not have kids to support yet or other family concerns that might tie you down from growing your retirement funds.
3. Vacation and other pleasures. Fun should never be taken out of the equation. Saving for a vacation is a better idea than paying off your European cruise in five years or so. It will only spoil the good memories you had as soon as the monthly bill starts coming.
4. Education. In order to stay competitive, you might need to take an extra course or a post – graduate degree. Unlike college, there is a dearth of education loans for post – college education as you are expected to provide the funds now that you have the capacity to earn them. Unless if you are a genius and can rely on scholarships for advanced studies, it is wise to stock up the necessary funds for such resume upgrades. If you have children, you should also consider saving for their education when the time comes.
5. Investment. This is perhaps the most neglected motivation for saving. Today, the tendency to consume is always higher than the propensity to save. Why not be the exception and start saving for investment? Studies show that most multi-millionaires are not highly paid professionals or corporate executives.
They are individuals that live below their means and invest the surplus in business. You do not need a strong business acumen or a Harvard education to start and do well in investing. There are a lot of ways to investing even with small capital and very little experience. All that is needed is your will to do so.