One of the most important things you can do for your financial wellbeing is to get in the habit saving. You probably hear about the importance of saving all of the time, but that is because it is so important. There are few things in the realm of asset management that are as important as developing a saving habit. And you can start today, no matter how much money you make.
Save what you can
Many people look at their finances and become discouraged because they can´t save a whole lot right now. However, anyone can save, and can do so at any point in life. It´s not how much you put away, but rather that you actually do it. Developing the habit will ensure that you will set money aside, and as you begin to make more money, you can set more of it aside. People who are in debt should do their best to put money into savings, as well as aggressively pay down their debt. Even if you only have $100 to open an account, and can only put in $20 per month, that´s a start. Eventually you will be able to sock more away, as you earn more money and pay down debt.
Paying yourself first
This hackneyed phrase is one that makes sense on a financial level. Get used to putting your savings into your account before you do other things with it. Many workplaces allow you to have a portion of your income directly deposited into a savings account. You can figure out how much you can put in using dollar amounts, or you can express it as a percentage of your income. Many people find that they can afford 10% to 15% of their income for savings quite easily.
What you get out of it
Extra savings outside of investment accounts, such as retirement plans, can be very useful. You have a readily liquid account for times of emergency, and you can grow money (though at a slower pace than other investments) with fairly low risk. A money market savings account or an online savings account can help you earn higher yields, but they may not be as accommodating when you need emergency cash.
Additionally, having a savings account means that you will not have to consider borrowing against your retirement account. And, if you run into unexpected expenses or a spot of trouble, you can extricate yourself without charging the emergency to high-interest credit cards.
Once you develop the habit of saving you will find that it comes easier to you. And it can provide peace of mind, since you know that you will have backup in times of financial strain.