Saving money is a lot like putting gas in your car: Whether you need it now or later, it gives you peace of mind to know that you have what you need to get where you want to go.

Still, it can be hard for some to focus on the future when spending money now provides instant gratification. If a long-term financial strategy isn’t on your radar, keep reading. We’ll discuss nine of the most significant benefits of saving money to help you plan for the long term!

The first step of any savings plan should be to save up so you can build an emergency fund.

As the name implies, an emergency fund is money set aside for unexpected expenses that you need to pay quickly. While the concept is simple, the execution is more complicated: You must have the discipline to save money for an emergency fund and not touch it for non-emergency purchases.

Finding an incredible deal on your dream car may feel like an emergency since you’ll only have one chance at it. However, having your car’s engine break down and leave you without a way to get to work is an actual emergency that an emergency fund is designed to cover.  

So, how much do you need to save to build your emergency fund?

The general rule is to save three to six months of living expenses.

What’s the difference between a rainy day fund and an emergency fund?

An emergency fund is for emergencies, while a rainy day fund is used for unexpected expenses that don’t fit into your budget.

A pet needing emergency surgery that could take thousands out of your bank account would call for an emergency fund. A vet visit that costs a few dollars more than you expected would call for a rainy day fund. 

The idea is that your rainy day fund is for small costs outside what you budgeted for the month, while an emergency fund is for significant unanticipated expenses.

One of the greatest benefits of saving money is the advantage of time when building your retirement fund.

For example, an employer-sponsored retirement plan with a company match may seem like it only takes money away from your other goals — like building an emergency fund. However, over time that money accumulates and can eventually give you the freedom to do whatever you want with your golden years.

Ask yourself these questions to help you decide which tools will help you meet your long-term goals:

• What are my essential goals for later in life?
• When do I want to retire?
• Where do I want to retire?
• How much support and care will I have from my family?
• Does my current employer offer a retirement match? 

The answers to these questions will get the ball rolling, helping you determine how much you need to retire comfortably and what tools you need to reach those financial goals.

Major expenses don’t have to be expensive if you know they’re on the horizon and save accordingly.

In the long term, you can build wealth through passive income strategies like index funds, money market funds, or rental properties. These tools take time and effort to build, but once they’re in place, they earn you money with little to no extra work.

There are wealth-building tools for short-term goals as well.

Accrue Savings and our partners make it easy to save for future expenses by rewarding you when you reach your savings goals. Whether it’s for travel, engagement rings and other jewelry, or medical treatments, Accrue is here to help you save. 

Regardless of what amount of money helps you achieve financial security, it should provide enough stability to plan for long-term wealth building and follow through with your plans. 

For example, compound interest is the interest on savings calculated on both the principal and accumulated interest. In other words, compound interest accelerates your savings by growing your money upon itself. However, you can only use it if you have the financial security to dedicate funds to it without withdrawing them before they grow.

When a life event causes a financial emergency, you’re stuck with limited solutions if you don’t have savings. That could mean building thousands of dollars of credit card debt, or it could mean taking out a loan with a high interest rate just to keep your head above water.

But when you have savings, you have many more options to take care of the emergency without losing your financial freedom.

 For example:

• Building and maintaining a high credit score earns you access to loans with lower interest rates.
• Being able to make large purchases without financing can lower the overall price.
• Some savings accounts and tools have a minimum deposit before you qualify to use them. 

When you’re not saddled by debt, you can also devote your money to paying off more debt, otherwise known as the debt snowball method.

One of the most common reasons people build debt is education and self-development. The loans you take out to pay for education often mean paying for your courses for years after you complete them. So even if your education earns you a higher-paying job, you’re still stuck with interest-accruing loans.

When you invest in yourself using savings, you pay once upfront. From there, the wages you earn from your higher-paying job are yours — no costly repayment plans.

Roth IRAs are a popular retirement savings tool because the money you put in them is taxed upon submission instead of withdrawal like a traditional retirement account. 

That’s important for a few reasons.

The first is that most people are in a higher tax bracket when they retire, which means they pay less in taxes when they save for retirement through a Roth earlier in life. Second, if tax rates go up in the future, then you will have already paid what you owed when the rates were lower. NerdWallet has a great resource to help you learn more about Roth IRAs and other tax-efficient wealth-building tools.

Where do you see yourself in five years? What about 10? How about 30?

If you don’t know the answer, you may not be where you want to be — or with the savings you need to be comfortable. 

These questions can help kickstart short- and long-term savings goals that align with your life goals:

• Do you have debt keeping you from saving more?
• Would a degree or trade course help you earn more in the near future?
• Do you want to buy a home? 
• Will you need to pay for education in the near future?
• Is there something you’ve always wanted to do but never had a chance?
• How long do you want to keep working?
• Think about where you want to retire. How much space will you need, and how much will the cost of living there be?

Ready to create saving habits, grow your bank account, and earn financial freedom? Good! Here are our best tips to figure out the right savings tools and strategies for you.

Set clear savings goals

It’s much harder to have the discipline to save when you don’t know what you’re saving for. Plus, you can’t decide which tool is best for your goal if you don’t have a clear one.

Define your savings goals so you have a goal to work toward. The goal will vary for everyone, so be sure to revisit the self-reflective questions we listed earlier to help you determine your specific desired savings amount.

Create a budget

Once you have clear savings goals, you can build a budget around your income and needs (like debt payments) to reach them.

Creating a budget takes time and can be hard to stick to at first. However, once you’re in the habit of following them, budgets can be one of the most important tools for wealth building.

Automate your savings

A simple way to guarantee that you save is to set up your bank account to automatically set aside a certain percentage of your income for savings. These options are often free and take the savings process out of your hands, so you don’t have to put money aside manually — which may make you more likely to forget about it.

Investigate high-yield savings or investing

Looking to build a nest egg for retirement? Investing in reliable mutual funds could net you exactly that over time. Want to save up for a big purchase at the end of the year? A high-yield savings account and a dedicated savings habit could help you reach your goal much faster than a mutual fund.

Save with Accrue Savings

Accrue Savings is an excellent way to save up for big purchases without going into debt. Create a savings goal within Accrue, and when you shop with one of Accrue’s partners, they’ll kick in money to help you reach your goal faster!

Max out your savings with Accrue Savings

Instant gratification may feel great in the short term, but it could be tanking your long-term financials in more ways than you realize. While saving may be challenging at first, all it takes is a little time, discipline, and money to unlock better wealth-building strategies. 

Take advantage of resources like Accrue Savings to help you reach your goals faster. But don’t just take our word for it — sign up today to see how Accrue and our partners can help you maximize your savings!