What are the Benefits of Saving Early?Submitted by iCapital on June 4th, 2020
For many Americans, the art of saving is something that they have yet to master. This is especially true for those who have just entered the workforce or have gotten their first good-paying job. The mantra of these young professional men and women is often to want to spend instead of saving, and it might be time that changed. Thus, we have brought together some of our favorite benefits of saving early, and how it can set you up for success.
Gets you in the right mindset
As a new employee, you will probably be limited in your spending and saving habits. You will have a salary, but it will be small, and you will have student loans, rent and other bills or debts to tackle. This is why establishing a 15% saving baseline is a great way to get into the right mindset for your future self. No matter how high you get in the company, that 15% baseline will allow you to already mentally put that money away for the future, and your future self will thank you!
Create the nest egg for a home
For many, one of the primary goals of their professional life is to purchase their first home. A starter home or a condo does not come cheap these days and saving towards this goal is a great thing to start early in your money-making career. If you are planning to own eventually or want an income property while you focus on your career, starting to save young is a great way to ensure that it can happen in just a few years.
Growing your emergency Fund
Whether it is a downturn in the economy that leads to layoffs or a parent or loved one gets sick, having an emergency fund is one of the best ways to save and protect yourself in the future. Most financial experts suggest saving up to three months of your salary, but naturally you can adjust as you see fit. An emergency fund is to be used as you need it, but make sure that you replenish the fund or else it will be useless the next time you need some extra cash quick.
Learning how to budget
Finally, but most importantly, one of the best benefits of saving early is it forces you to budget. Budgets are a little intimidating, but at the end of the day, the key to financial success is making and keeping to a budget. There are plenty of tools on how to create and draft your budget but chat with a financial planner if you still want to fine-tune it to your needs.
One thing is for sure, someone who starts to save at a young age will never question their decisions down the line. Whether it is growing yourself a nest egg for a down payment or wanting to establish financial stability early on in your career, saving early and sitting down with a financial expert to guide your savings is a great way to set you and your finances up for success down the line.
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