SAVING, MANAGING DEBT, AND BUDGETING
What is "saving"?
Saving, or savings, has many definitions in the English-speaking world. But most definitions describe saving as the act of putting aside money, after all consumption expenditures, for future use. Some experts add to the definition that savings may be more liquid and accessible than investments, which may not be immediately accessible.
What influences my ability to save?
Among many variables, the most basic influence is your preference, belief, and ultimately your decision to do without or abstain from present expenditures in order to have the ability to use this money at some time in the future. You should understand or have a goal in mind, and then make adjustments in current expenditures in order to meet your goals.
Why should I save my money?
Many people save money in order to attain certain goals. Some of the most widely accepted reasons to save money include: having extra money in order to invest regularly; accumulating money in case of an emergency (usually three to six months of living expenses in the form of cash); deferring on paying taxes by using before-tax income and employer matching funds (in an IRA, 401(k) or other retirement account); putting away money in order to purchase a principal residence; saving for vacations, to purchase cars, or unexpected medical expenses; and to fund your current or future educational expenses. Before you begin investing, you should have your emergency funds set aside, and should exclude these sums from what you will ultimately use for your investments.
What are some strategies to help me save money?
It is important to understand that the act of setting aside just a tiny amount of money on a regular basis quickly multiplies. If you save only one dollar per day over the course of a year, with even a fraction paid in interest to you, it will result in helping you achieve some of your financial goals. But it is not necessarily the amount that you ultimately save. It is having the financial discipline to stick to your plan of accumulating money that guarantees your success over time.
