SAVING MONEY FOR YOUR FUTURE INVESTMENTS

Before I start this blog, let us understand first the meaning of the word "savings". 

          "Savings is the money a person has left over when they subtract their consumer spending from their disposable income over a given time period. Savings can be used to increase income through investing".
                                                                                               Julia Kagan
                                                                                              Investopedia

It is very essential for a beginner to understand what savings is. To deeper understand this word, let us have an example.

Savings is money left over after spending for consumption. For example, Mary's monthly income is $6,000. Her expenses include a $2,500 rent payment, a $500 student loan payment, a $100 credit card payment, $350 for groceries, $60 for utilities and $50 for her cellphone. Since her monthly income is $6,000 and her monthly expenses are $2,560, Mary has $2,440 left over. If Mary knows how to save money, she will be able to handle emergencies in her life. If Mary does not save her left over money, she will suffer from personal financial crisis. This is scary!

In this scenario, savings is very important for us. So after reading this, I hope that you catch some important thoughts about savings as it is the first step for investing. You need to save money because money is the key to start up investment. You need a bank!

To facilitate your first step in savings, lets have the different examples of savings.

A checking account is a deposit account held at a financial institution like banks that allows withdrawal and deposits. It is very liquid and accessible using checks, automated teller machines, and electronic debits.

A savings account pays interest on cash not needed for daily expenses but available for emergency. Deposits and withdrawals are available over-the-counter. Sometimes, the interest of savings account is higher than checking account. Nowadays, online banking is more efficient and giving higher interest than personal banking.

A time deposit is an interest-bearing bank account that has a pre-set date of maturity. A certificate of deposit (CD) is the best known example. The money must remain in the account for the certain period of time in order to earn high interest rate. The longer the time to maturity, the higher the interest payment will be.

Saving extra money is a very good practice. You will realize it worth as the time goes by. 

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