Your twenties should focus on having fun, but that doesn’t mean you should avoid also making sensible choices. While shopping splurges and some expensive getaways are great ways to make memories and enjoy yourself, you should also consider putting a set amount of money into a savings account every month. Don’t think it’s important? Here are four reasons you should be saving in your twenties.
1: For a Better Retirement
Interest accrual on savings is compounding, meaning that the earlier you start saving, the harder your money will work for you. Year after year, you’ll start to earn interest on your interest, growing your savings at an exponentially increasing rate. One way to save is by using a whole life insurance policy with an investment component that you can use like a tax deferred savings account.
Alternatively, if you just want your loved ones to be prepared for the future, a whole life insurance policy isn’t your only option. There is also term life insurance, which is a preferable solution for many due to its affordability and tax benefits. What is term life insurance? It is when you pay an insurance premium for a fixed set of time, which makes it less expensive than permanent life insurance (like Whole Life Insurance).Since life insurance rates increase as we age, this makes Term Life Insurance a perfect option for those in their twenties. It can also be renewed for additional terms and converted into a permanent life insurance policy over time.
2: In Case of an Emergency
Emergencies happen at any age. You never know what’s going to happen – you might suddenly need to find a new job, move out of your home, or help another family member get back on their feet. In these types of situations, it is always better to have some money set aside, even if it’s not a huge amount. Otherwise, you might find yourself in a very sticky situation that you can’t get out of.
3. To Learn Good Financial Habits
Saving when you are younger makes it easier to save when you are older. While you might not need thousands of pounds set to the side as much as you will when you are well into your adult years, by getting into the habit in your twenties, you’ll quickly learn good financial habits. It will mean that, when you are thirty, forty, fifty, and beyond, you will be well versed in always having an emergency fund and saving for the future.
4: For Your Future Family
Whether or not you have your own little family now, there is a chance you will in the future, and saving now will be beneficial for them. If you end up having kids, for example, you will want to give them the best opportunities possible, and that involves having enough money to help them pursue their interests and get into college. You’ll feel far more at ease if you have a lump sum in your account before you have children!
Saving in your twenties doesn’t have to involve putting hundreds of dollars in an account each month – even a small amount will make a difference. Not only will it ensure your future is more secure, but it’ll also get you into habits that will last a lifetime.
