Many people make the mistake of believing that credit is a substitute for savings. They convince themselves that there is no need to save when they’ve got credit cards at their fingertips. However, credit cards can come with a hefty price tag attached.
Not only will you have to pay the money back that you borrow, but you’ll have to pay it back with interest attached. In some cases, you may need access to funds for a situation that would render you incapable of paying a loan back.
Instead of relying on credit, it’s critical that you put money away in savings, particularly when you have a family. Here are some of the reasons why.
It’s important to have money set aside for any unexpected repairs you need around your house. You never know what could happen. Your roof may need to be replaced, or you may even need your air conditioner fixed. As a homeowner, you never know what can happen. The best way to guard yourself against astronomical bills that you’re unable to pay is to have a fund set aside for reasons like these.
Usually, emergency repairs come totally unexpected, so it’s in your best interest to have the money ready to go. Otherwise, you may risk not being able to pay the repairs, which could leave you in serious trouble until you can.
Your retirement is closer than you might like to believe. The truth is that the sooner you start saving for it, the better. When you invest money into a special account specifically for retirement, it will grow and grow over the years.
Since you won’t have a steady income anymore during your retirement it’s important for you to know that you’ll be capable of living comfortably. It’s unrealistic to believe that your children are going to take care of you one day. Plan for the future instead.
Buying a House
Whether your family owns your house already or you aren’t owners yet, you may want to buy a house in the future. Even though you aren’t expected to pay for your house in full, you’ll still have to have a down payment to qualify for a favorable loan.
Most people suggest putting down at least 20% of the total price of the home. If you plan on being able to buy a home one day, you’ll need to have that cash in savings so you can borrow the rest.
Family Vacations As a family, it’s ideal to go on a vacation once in a while. However, the more children that you have, the more expensive trips are. Putting away money each month towards a family vacation fund is a great way to ensure that you create lasting memories with your children. Prioritize creating those memories together by having a vacation fund in savings.