by Tim O'Dell

Created on: April 17, 2009   Last Updated: June 03, 2009

Saving is vital for future happiness. A credit hungry culture encourages spending money which we don't have. Putting aside money for those little emergencies, which inevitably crop up, is necessary to avoid debt. Mortgages, university fees, retirement, and luxury holidays have to be paid for one way or another. Saving for these will provide financial peace of mind. With no savings you will be building a mountain of debt for many years to come.

One of the major financial commitments in life is sending children to University. College fees, accommodation, and incidental expenses, soon mount up. Student loans are available, but are responsible for burdening children with debt before they've even started employment. The more you can fund your child through college, the better start they will have in life. However, doing this through credit and loan facilities will only transfer the debt from the child to the parent. Saving as much as possible for this eventuality is by far the better option.

For some people, travel is the top priority. For the large majority who don't wish to camp this means paying for hotel accommodation. Along with the expense of the room, the necessity of eating out and travelling by hire car, or public transport, means costs soon sky-rocket. Using credit or loans for vacations will build your debt faster than anything else. Try and put some cash aside each month to pay for these luxuries.

Nobody can go through life without coming across expensive emergencies once in a while. When your car breaks down, your roof starts to leak, or your appliances fail, repairs or replacements must be paid for. If insurance doesn't cover the costs, and no spare cash is available, the natural reaction is to turn to credit cards or personal loans. With loan repayments costing around three times the original price, and credit cards running at an average of 17% interest per year, this is an expensive way to deal with emergencies. Yet there is often no option, unless you have saved for 'that rainy day'.

Relying on credit is the road to ruin. Statistically, the repayment on an ordinary personal loan over 5 to 10 years will total around three times the original amount borrowed. When it comes to credit cards the typical interest rate is around 17%. If a holder spends up to the credit limit on the card it can be surprising how long it takes to pay off. For instance, if a card has a 5,000 limit, and the holder pays around a 150 minimum payment each month, it would

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