Some people earn just enough to get by after they have paid their taxes and after they paid the basics of life, such as their mortgage and living expenses. Many people in more developed countries, however, have some disposable income left after they have paid for the necessities of life. What should they do with this? Should they spend it or should they put it aside for future needs?

Some of this extra money should definitely be saved. All of us are likely to experience a period in our lives when we are likely to need some extra money. It is a great relief to know that we have some savings that we can use to deal with such situations.

Sometimes, these situations are unexpected. Perhaps you suddenly discover that your house is in need of fairly drastic renovation. You may need to have a great deal of work done to the roof, for example. Such work can be very expensive and it is a very good thing if you have the money for the repairs to hand. Of course, you can always borrow money from the bank, but you have to pay interest on such a loan and this can be very expensive.

Then, you may suddenly lose your job through no fault of your own. A larger firm may take over the firm which you work and you may be declared redundant. Although you may get a redundancy payment, people often find that such a payment does not last long while they are between jobs. You will feel more secure if you also have some savings to tide you over until you get a new job.

Then, there are the things that happen in the future that are either predictable or quite likely to happen. These situations need savings also. For example, young couples should try to save a good part of their disposable income when they are first married, if it is their intention to have a child or children in the future. Having a child is a very expensive business, even if you just take into consideration the amount of equipment that a child may require these days.

Then there is the fact that either one parent will have to take time off paid work in order to look after the child or the parents will have to pay for childcare. The couple will certainly need any savings that they have been able to set aside,

Children grow up and, hopefully, go for further education. Having a son or daughter at university can cost a lot of money and you may find yourself with more than one at university at the same time. It will be much less stressful if you have saved towards such a situation gradually over the years.

Then there is the rather depressing fact that most of us will get old. Only people who, sadly, die young, are spared such a fate. Old age can be much more comfortable and enjoyable if the elderly person has some money put aside to augment their pension and pay for a few luxuries. Also, many people are now retiring while they are fit and well. They may want to travel or take up an expensive hobby and their savings will help to finance such ventures.

I am not suggesting that everyone should save all their disposable income. If you have a significant amount of extra money, it is perfectly all right to spend some of it on making your present more enjoyable. Just do not forget about the future.