9 Tips to save money
Savings are the amount of money that is left over after someone pays all expenses and obligations, over a given period of time. There are multiple forms of savings. A person can either keep their savings in cash, or they can put them in a savings account. Bank accounts offer from standard deposit accounts to checking and money market accounts or Certificates of Deposits. Besides these methods, a person can also use their savings to make investments.
Savings accounts are known to be risk free, but they also offer very low rates of return. On the other hand, investing is a method that comes with its risks but also offers high rewards. If a person is not able to save money, it’s a sign of household debt or negative net worth. Usually, people save money for vacations, different life goals – such as a car or a house, a child’s education, retirement and so on.
What is the difference between savings and investing?
Savings is the first step towards investing. First, you need to save money to be able to invest. Investing means purchasing of investing funds. Investments are a long-term method to increase wealth, by letting the money grow.
You can save up money in different ways. First, you can save money in your current account, but that won’t give you any interest. You can also save up in a savings account. A savings account represents a deposit account that bears an interest. The account can be held at the bank or at any other financial institution and they can be a good solution for short-term necessities. They pay a modest interest rate and represent a safe solution, even though you may be limited to the number of withdrawals. The last and least recommended method is to keep your savings in cash, but it is not the safest option.
The fact that the savings accounts are easy to access and pay interests, even though they are small, makes them a safe option for saving up some cash for future acquisitions like a car. The number of withdrawals can be limited, however the amount of money that can be withdrawn is usually unlimited. Something worth mentioned is that the interest one gets from the savings account is taxable income.
How to save money?
When you go shopping for groceries, make a list. This will help you stay focused and buy only the necessary things.
Check sales. When you want to buy gadgets, do a previous check-up, and find any sales there might be going on. It can save you some real money.
Buy once. For example, instead of buying multiple small bottles of water every day, buy big bottles and refill your small one.
Cook and make your coffee at home, instead of buying lunch or coffee every day.
Use public transportation or walk to school or to work, instead of taking a taxi or drive there.
If you don’t want to take the bus, or walk, take the car, but start a carpool and put money for gas together with the people you’re carpooling with. Driving with colleagues will save you some cash.
Try going in nature instead of clubbing or going to restaurants. This way you’ll not only save money, but also feel good and be healthier.
Buy secondhand books, appliances, furniture or even clothes. Also, you can borrow stuff and stop impulse buying.
Give up any vice you might have, such as smoking.
Saving money is a very important action in your future financial stability. Every saving opportunity can help you improve your financial situation, especially if we’re talking about a recurring expense.
The savings you’re left with, if put safe, can assure a stable future for you or your family. If you go further and invest your savings, you can make even more money on the long-run and you’ll be able to live the life you want.
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