Banking Basics

What is saving money and why is it important?

Hi, Good Morning to all, Do you know, what is saving and how can saving money take place?

Congratulations! Here is your answer

We are human being and only humans can do something to full fill their longings by saving money. Desire is the key factor to live better from others for saving money.

We all are earning as per our eligibility and as per income our expenses also depend. Generally, humans earning more and more to full fill the need of their life.

One thing must note that big earnings are another thing and by which hoe much you have to save for your future is another thing. So let’s take a look at how to save money.

What is saving?

Savings is the best parts of the income not spent on present expenditures. This means, the money you put aside for future use rather than spending it immediately.

In economics, savings are the amount that is left after spending from earnings.

In banking, savings expressed as savings accounts, which are short-term, interest-bearing deposits with a bank or other financial organization.

In general, savings refers to the amount left over after an individual’s consumer spending is subtracted from the amount of disposable income earned in a given period of time.

Why is saving so important?

Saving money is important because a person does not know, what will happen in the future? So money should be saved to pay for unexpected events or emergencies.

An individual’s car may breakdown, their dishwasher could begin to leak, or a medical emergency could occur, or making living sheds or needs to repair. Without savings, all unexpected events can become large financial burdens.

Accordingly, saving funds enable an individual or family to turn out to be monetarily secure. Cash can likewise be spared to buy costly things that are too expensive to even consider buying with month to month pay.

Purchasing another camera, buying a car, or paying for an excursion would all be able to be cultivated by sparing a part of the salary.

Any need and wants can be full filled by saving the money. Every people should be habitual to save money for future emergencies or luxurious desires.

A savings account is best safe to keep cash that you don’t plan to spend immediately because they keep your money safe and accessible while paying you a little bit of interest.

Why Does Savings Matter?

It is dangerous not for saving money. Not only is it financially risky, but it also creates unnecessary stress.

To enable savings, Sohan must reduce his expenses so that they are less than his income, and he should make regular, disciplined deposits into a savings and/or investment vehicle.

Sardonically, when a country saves so much wealth that it barely spends anything, its economy may suffer. This is called the absurdity of economy, which is an economic theory developed by John Maynard Keynes that states that the more people save, the less they spend, and thus the less they stimulate the economy.

How Does Saving Money Work?

There are only two things to do with money:

Save it

or

spend it

For example, let’s say Mr. Sohan is an engineer and working in a multinational company. He is planning to save money from his earnings. His monthly earnings are $3100 from salary, $400 from others.

His expenses are the following:-

Rent: $1,200
Car payment: $450
Student loan payment: $450
Credit card payment: $300
Groceries: $550
Utilities: $75
Cell phone: $75
Gas: $100

So,

His Total earnings:          $3500
His Total expenses:        $3,000

Sohan’s Total Saving:     $500

Because Sohan spends $3,000 of his $3,500 income per month so he saves $500.

If Sohan’s expenses are higher than his income means he is not saving; he is living paycheck-to-paycheck.

If he gets any unwanted incident, has an emergency like coronavirus pandemic and closes all works, and blessed to stay at home for two weeks, he would have a little backup.

Read| How to invest in share market -a step by step guide

Where to Save Your  Saving Money?

For short-term or temporary savings, you usually want to put your money somewhere safe and any interest you earn on it is just like icing on the cake.

Deposit accounts, like savings accounts, checking accounts, certificates of deposit, and money market deposit accounts in banks.

If, however, you have a much longer-term goal, such as retirement, you might think about investing some of the money in something a little riskier, as the stock market, that can offer a higher rate of return, suggests CNN Money.

We will discuss the types of accounts in detail in the next post.

Thank you!!

You Might Also Like...

3 Comments

  • Reply
    8 Traits of Successful Savers and Investors - Ratiosys
    26th April 2020 at 5:30 PM

    […] A very common and popular trait among successful savers is the fact that they automate their savings. […]

  • Reply
    ratiosys
    26th April 2020 at 11:42 PM

    Nice Post

  • Reply
    LarryDap
    7th May 2020 at 4:32 AM

    In case you search for your skilled professional help with all your customized essay, groundwork paper, expression paper, dissertation or some other bit of crafting, you happen to be suggested to show.

Leave a Reply