Category: Savings

Does Having Savings Really Make a Difference?

If you have never had much in the way of savings, you may wonder whether it is really worth bothering. You might that that it will not be worth the hassle and you would rather spend the money than put it into a savings account. There are some people though, that have lots of savings and thing it is really worthwhile. They meticulously put money into savings each month and always make sure they have a certain amount. However, you may wonder why they bother to do this. It is worth understanding what the advantages of having savings is and this will help you to make sure that can decide whether you think that it is something that will work for you.

Get interest

When you put money into a savings account you will get paid some interest on it. This means that you make a bit of money by doing nothing apart from not spending. If you put it in a high interest account or a bond then it will get even more interest paid on it. This will enable you to gain some money from your savings. This interest is not that high though, especially when interest rates are low. This means that you will need to think carefully about whether you feel it is worth keeping the money for just this reason. It could be better to think about investing the money because the return is potentially better. It is a risk though, as an investment could lose value as well as gain it. With an investment you will be buying an item that you hope will increase in value. There is a risk that it will not go up in value or that it will go down, so you can lose money and it is best to keep your money invested in it for a significant period of time such as at least a decade, to allow for natural increases and decreases in value to flatten out.

Have something to fall back on

Some people really like the security of having some money available to fall back on. They like to be careful, so that if they have an emergency and need extra money then they will have the savings there to use. Some people may even save up enough money to cover several months of costs in case they lose their job and do not find one for a while. Some people will want to have enough money to replace a car if it breaks down and cannot be repaired or other things like that.

Can save up for things instead of borrowing

Some people like to have savings so that they are able to buy things without borrowing. Although borrowing can be helpful in some situations, it does have a cost, which means that if you borrow to buy something, it will cost you more money than if you buy it using money that you have. Therefore, some people will save up before they buy something so that they do not have to borrow the money.

So, now you know different reasons that people might have savings, it is good idea to contemplate whether you feel that it is a good idea to save yourself. Think about how you normally spend money and whether you borrow much and whether you think that savings might be helpful. Consider whether savings will give you peace of mind also think about whether the prospect of getting some extra money as a result of saving, both form interest and from not having to borrow, is appealing to you.