There are many people that will have a savings pot because they want money for the future. Other people may look at them and just wonder why they are bothering to do this. There are actually a lot of good reasons to have some savings for the future and it is worth thinking about these and whether they might be something that you should perhaps concentrate on getting for yourself.
To Have Money Ready for Retirement
Some people like to make sure that they will have a lot of money available for when they retire. Some people may be happy to use their pension for this or just see what happens nearer the time. However, others like to be better planned and will try to have a lump sum of money available too. This means that if they want to go on holiday or need to buy mobility aids or even pay for a carer, they will have the funds available to be able to afford to do this. It is something that some people just do not want to think about or feel will look after itself when the time comes. However, others would rather be well prepared in case they need this money and they feel a sense of security knowing that it is there for them.
To Have Money in Case of Job Loss
Some people like to have some money available in case they lose their job. This might be because they are in a field of work where jobs are not very secure so they worry that they could be likely to be made redundant. It might be that they are a contractor, freelancer or self-employed so they feel that they may be likely to have times when they are not able to earn money. It could be that they are just cautious and get a feeling of security knowing that money is there. Some may have a few months money, assuming that they should be able to find work fairly quickly, but some might like to have a few years worth of money just in case they have a long time out of work. If they are self-employed this could be more necessary as if they get unwell and cannot work, they will not get any sick pay.
For Large Purchases
Some people like to have money available in case they have a large purchase to make. This could be for a deposit on house, to buy a vehicle or a big holiday. It can be nice just to have the money in case your vehicle breaks down and you suddenly need it or you decide that you would like a holiday and you do not want to borrow. It can be a good alternative to use savings instead of borrowing money because you will not have to pay interest on it. You will lose some interest on the savings though and you will need to think about whether it is worth losing that interest rather than getting a loan. Loans usually charge more interest than you would pay on savings anyway.
Some people just like to have some money put by for emergencies. They like to think that there will be money available if they have an unexpected cost. So, if they get a bill to pay that they had forgotten needed paying or they need to replace something in the home that is broken, the money will be there. Not only will it normally be cheaper to use savings compared to borrowing, it can be more convenient as well as the money will be readily available if it is in an instant access account.