The Importance of Saving

The Importance of Saving

Saving is important for several reasons. Without saving there would be no investment and without investment there would be no jobs and without jobs there would be no economic growth in the society. Without economic growth, there would be little to no savings. This cycle is described as the savings cycle and in order for wealth to be created, saving is mandatory.

The Savings CycleClipboard01

 

Individually, it is important to set aside some of our income as savings in order that was can make investments at a later date. This is how people accumulate the funds to make major purchases such as the purchase of cars or houses. Even though you may borrow some of the funds to make a major investment, you should realize that borrowing is only possible because someone saved enough money in order to be able to lend it to you in the form of a mortgage or car loan. While saving may not be easy on a small or modest income, it is still possible to save regardless of how much or how little is earned.

For those who are employed, the easiest way of saving may be having your employer deduct established amounts from your salary before your pay hits your account or before you receive your salary check. However, for this method to be effective, the deducted savings must be inaccessible until a set time in the future or there should be penalties attached to spending these funds before established dates and times. Arrangements can be made with your bank to have your savings deposited to accounts that attract  penalties for early withdrawals.

Another relatively simple way of saving is setting aside all coins instead of spending them. Certain apps such as Smarty Pig which is a free online piggy bank, can also help you to save towards your various financial goals.

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3 COMMENTS

  1. Interesting read. Which app would you recommend for a “beginning saver?” If you could write an article comparing and contrasting the different saving apps out there, that would be fantastic!

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