Essentially, saving can help you attain financial independence. Saving will help you get ahead of expenses, which can mean saving for a house, car, and even more minor expenses like a flat-screen TV or a new phone. Actively saving money means you will be prepared for both planned and unplanned expenses, like saving for a vacation or setting up your emergency fund for a rainy day. Retirement is another reason to save money. Saving for retirement is a bit different than the rest of your savings – when you save for retirement, you will most likely be investing that money. Last but not least, you should save for medical emergencies. Your savings in this category could cover future costs for prescriptions, glasses, co-pays, etc. Here are some budgeting resources so you can get a head start on saving!

Preparing for Expenses

These expenses can either be big or small. Big expenses might include a down payment on a house, buying or putting a down payment on a car, and buying furniture. The small(ish) expenses you could be saving for are buying a tv, phone, or laptop. Most of these smaller expenses might have financing options, but you need to be careful with interest rates and fees, and saving for these smaller expenses can also prevent your finances from being tied up in the future when you need them.

Unplanned Events

Another thing you should consider when you save is saving for planned and unplanned events. Most of us would rather not think about the possibility of getting fired or laid off, but we should plan for it just in case. When saving for this example, generally, three months is the recommended minimum that you should save, but it is best if you could have six or more months in savings. More unplanned events can include replacing household appliances such as a fridge, washer, dryer, dishwasher, etc.

Planned Events

A planned event you should consider saving for is vacation. When you save for a vacation, you invest in the health and well-being of your future self, and you deserve that. The same goes for dates, family outings, your children’s college funds, or whatever you have planned.

Retirement

Retirement is an incredibly important thing to save for. When you save for retirement, your money will go into an investment plan specifically for the purpose of retirement. I will go more in-depth on this in another article. There is so much unknown about the future. Social security may or may not exist when gen z gets to retirement age. Climate change may or may not make the planet uninhabitable. But you should always plan for “just in case.” Worst case scenario, all that does happen, and you have a bit of cash to blow. In the best-case scenario, you have extra income to go with your social security benefits, and you can have the retirement of your dreams.

Medical Emergencies

This category includes the things your insurance does not pay for. Surprise procedures, emergency room visits, glasses, braces, prescriptions, co-pays, etc. If you can save for this category, I highly recommend that you do so. It will ensure that you have it covered if you ever need anything medically. This can be in a savings account or an FSA/HSA if you have one. In some cases, your employer may contribute to these accounts. I will cover this topic further in another article.