Deciding to Save,Invest and How to Save Money
Deciding to Save and Invest
Any saving that you do now may be only for purchases that require more money than you usually have at one time. When you are self-supporting and have more responsibilities, you will probably save for other reasons. For example, you may save to have money in case of emergencies, such as losing your job, and for your retirement. Most Americans do so for these reasons. Saving evens out a person's ability to spend through out his or her lifetime. The saving of any individual benefits the economy as a whole. Saving provides money for others to invest or spend. Additional savings also allow businesses to expand, which provides increased income for consumers and raises the standard of living. Generally, when people think of saving, they think of putting their money in a savings bank or a similar institution where it will earn interest. Interest is the payment people receive when they lend money-allow some one else to use their money. A person receives interest on his or her savings account or similar saving plan for as long as money is in the account. You many options of places and ways to invest your savings. The most common places are commercial banks, savings and loan associations, savings banks and credit unions. Before depositing money, investigate the different types of financial institutions in your area and the service they offer. Each institution usually has several types of savings plans, each paying a different interest rate. In comparison shopping for the best savings plan for you, you need to consider the trade-offs. Some savings plans allow immediate access to your money but pay a low rate of interest. Others pay higher interest and allow immediate use of your money, but require a large minimum balance.
Passbook savings accounts are also called regular savings account. With a passbook savings account, the depositor receives a booklet in which deposit, withdrawals, and interest are recorded. A customer must present the passbook each time one of these transactions, or business operations, takes place. A statement savings account is basically the same type of account. Instead of a passbook that must be presented for each transaction, however, the depositor receives a monthly statement showing all transactions. The chief appeal of these accounts is that they offer easy availability of funds. The depositor can usually withdraw money at any time without paying a penalty-forfeiting any money-but there is a trade-off.
A money market deposit account (MMDA) is another type of account that pays relatively high rate of interest and allows immediate access to money. The trade-off is that these accounts also have a $1000 to $2500 minimum balance requirement. Customers can usually make withdrawals from a money market account in person at any tome, but they are allowed to write only a few checks a month against the account.
The term time deposits refers to a wide variety of savings plan that require a saver to leave his or her money on deposit for a certain period of time. The period of time is called the maturity, and may vary from seven days to eight days or more. Time deposits are often called certicates of deposit (CDs), or savings certificate. They state the amount of the deposit, the maturity, and the rate of interest being paid. The amount of deposit and interest rates vary wide. Some CDs particularly those paying higher interest, require a minimum deposit. The minimum may be as small as $250 or as large as $100,000. CDs at credit unions are called share certificates.
Step 1: Set your Mind to Save
Saving money is actually a state of the mind. Before you can start, you have to renounce from spending and discipline yourself.
The next time you want to buy something, take the P50 or P100 out of your wallet, and stash it somewhere. See? That's called saving. You don't end up with stuff; you end up with MONEY. To retrain your brain, start thinking about the following:
Accept frugality as your savior. Become a closet cheapskate and emulate your frugal friends. Note that they fix the shower curtain instead of buying a new one. Sit down with Depression-era relatives and ask about economizing.
Cry poverty — with style. Learn handy phrases like, "Let's eat somewhere cheap." And "Cab? No, I'll take the bus this time." It's less embarrassing than you'd think, because more people are in your shoes than you think!
Step 2: Now save it!
There are a thousand ways to live on less. But you don't want to make your life a misery. Here are some of the most painless ways you can economize without losing out on quality of life.
Go veggie. If you can do three meatless days a week (without substituting pricey fish), you could save P200 a week, which equals P800 a month, which equals P10,400 a year! Beans: Ya gotta love 'em.
Never spend a windfall. Take that holiday money from your folks, that P0.75 change from the grocery store, that P0.25 coin that somebody dropped on the street, and any other extras and save 'em.
Haggle. You'd be amazed at who will drop their prices, fees and interest rates — flea markets, banks, airlines, etc — as long as you know how to haggle.
Toss the catalogs. The most insidious form of spending temptation known to man or woman. Chuck them straight in the trash. Yes, including Victoria's Secret. Sorry, guys.
Don't pay unnecessary fees. Like the P15 you pay just because you're not withdrawing from your bank's ATM. Or the late fees for returning videos. Or those fat charges banks hit you with when you write a check that, well, bounces.
Never pay a pro. If you can fix the neighbor's car, and she can paint the bathroom: Do it.
Pay less for long-distance. Evaluate your phone bill and see how much you're paying per minute. Some dial-around codes or cheap calling cards may give you a better rate.
Never pay full price. If you must shop, discover your friendly P99-and-below-shop in the neighborhood or the online world of discount Web sites. Ebay.ph, Auction.ph, and BidShot.com are good sites for cheap auctions, just be wary of scammers!