Saturday, May 17, 2014
World of finance: The complex balancing act of saving
You see that if you are working or have seen your parents work, you will notice that there will always be a discussion about how to save. Usually the saving is done by normal people is when all your combined expenses have been paid the remaining amount left is your discretionary income meaning it is up to you what you want to do with it. You can either spend it on vacations, buying stuff for your house or you can stash away for a rainy day. But here comes the complex, how to divide those savings into places where you will either see your money grow like investing or just putting it away for some other use. It is perplexing issues because there are so many competing interests that can lay claim on those savings that it your head starts to spin widely. I mean where you start allocating your savings to different venues. If you have merger savings then you would either want to save it and put it in the savings account and let it grow (excruciatingly slow almost barely nonexistent) and leave it there until you need it for emergency use and slowly and steadily you build your savings. But since your expenses are usually more than your savings, those savings can disappear fast. But if you have more discretionary income then you have more options to allocate those savings to different things. You can put it towards your retirement account and you can also put it towards your kids’ college funds.