Save Money so that Money can Save (protect) you. I am repeating it again Save Money so that money can Save you. Art is not in making money but in saving it.
What is saving? It is the amount which remains after deducting expenditure from income which can be saved for future so that we can use them for future needs. So now what is saving we have clearly understood.
We know this saving word right from our childhood; if we remember in our childhood we were given pocket money and from that pocket money we use to spend and from that same pocket money we use to save money for our future needs in our piggy bank. Our Parents and Guardians use to give us pocket money and they use to teach us how to save money from our pocket money in piggy banks so as to enable us with this skill of saving money which will help us in future life.
In our families our women – mothers, sisters and females of the family have the habit of saving money, preserving it, do you know why? Because they very well know and believe that the future may not be as it is today, they know very well the sources which we have today may not be the same in future. Let me clear, it is not that they think negatively or they prone to negative thoughts, it is because they know very well that the future is uncertain. The habit of saving the money helps us to make or create the ladders for our bright future. So the money which is saved in piggy bank or our personal lockers or vaults is called savings.
Now, if the same money is kept in our drawers or piggy banks for some time say for next 1 year, 2 years, 5 years or any said period in the vaults, what will happen? We will get the same money which we have kept in them for the said periods. So what we do usually? We keep this money in banks in Saving Accounts, Fixed Deposits, Recurring Deposit Accounts or Pigmy Accounts so that we get some interest on this deposited amount. So by this we way we generate some returns or monetary benefits from this deposits. In future whenever we need this money for our needs we will get some extra money with our saving amounts. No doubt we get some returns on our savings deposited in banks but we have to look further to analyze this stuff.
In our life we are affected by two major causes or reasons; firstly uncertainty and the second is inflation. Come let’s see with an example. We buy an automobile say a car. We learn driving a car from a driving school. By learning how to drive a car properly we insure and confirm that our learning how to drive a car will reduce the chances of us harming a car by improper driving, but when we drive the car for say 6 months, 1 year or 2 years; despite giving regular services to the car in garage still the price of car decreases. We call this fall in the price of car or change in the value of car phenomenon as depreciation. Though, we have driven the car very safely with regular service checkups, still the value of car or automobile decreases. So as of now we have understood both the factors; firstly the accident or damage and secondly the depreciation. Accidents or damage can be controlled and reduced by removing our driving errors and being skilled in driving; but unfortunately depreciation cannot be controlled which we have to understand deeply. Similarly in our life; through savings we can manage uncertainty of the future. There are two actions one can take; one is control and the other is managing. When something is uncontrollable we can only manage it. We cannot control our future expenditure and future necessities but we can manage them. We cannot control inflation we can only manage it by investing our savings in higher return avenues or instruments. This is the only way to fight with inflation.
In the coming post we will see the savings, inflation and investing in more details. I am posting the concepts in much elaborated way as I know today most of the traders and investors are youth and they need clear and deeper picture for their bright future. If you like the posts please press the like button and please share the post to the needed one to help them prosper with knowledge and wisdom.