As kids, back in the day, we had different orientations concerning savings from our parents that helped to serve as the foundation for our financial beliefs as kids and subsequently as adults. We had parents that would advice their children to always spend every penny on sweets, biscuits and the likes; such a child would grow up to become a spendthrift, we also had those who would advice their children to keep a part of the money that they get from relatives, family friends, relations etc. and then after some time, they’ll go back and either request for that same amount of money or take It from the kids forcefully, this practice is even much worse than the other as the child would grow to become very stingy and would believe that the parents and everyone in particular wants nothing but their money which sure is a dangerous way to go. We have a set of parents that would encourage the kids to keep a part of every penny that comes to them at all cost introducing them to Saving things like the local safe also known as ‘’kolo’’ or ‘’piggy bank’’ today and other measures that would help the idea to be nurtured.
With the present state of the economy today in Nigeria, Africa and in the world, the above stated measure of keeping a part of every penny is a welcome development. It is called ‘’SAVING FOR THE RAINY DAY’’
WHAT IS SAVING??
This is simply an amount of money or anything that is not spent or used for immediate consumption. When it involves money, it is called saving money , when it involves time , its called saving time etc. Most times when the word Savings is uttered , our mind readily jumps to ‘’MONEY’’ , it does not readily refer to money alone as other things like time , materials etc can also be saved. This write up though will focus on saving of money. Saving differs from savings. The former refers to the act of increasing one’s assets, whereas the latter refers to one part of one’s assets.
WHY DO PEOPLE SAVE??
Most people save because of the uncertainty of tomorrow or rather the future. When we save money, it creates a sense of financial security and helps to combat the future. Saving also provides ’’ a way out’’ or a ‘’safety net’’ in times of emergency.
BASIC REASONS FOR SAVING MONEY
Money should be saved for three basic reasons which are:
- As an emergency fund
- For purchases
- As a retirement fund
AS AN EMERGENCY FUND
Sometimes, as individuals, life throws some financial surprises to us, this is why we need to stash away some wads of money for emergency purposes. These wads are known as ‘’ emergency funds’’.
One of the greatest enemies of saving is purchases, if not properly controlled, it can derail any budget. An increase in purchase results to increased expenditure and subsequently a deficit. However, proper savings helps us to purchase and spend with ease, it reduces the stress on our individual budget.
AS A RETIREMENT FUND
We can save in order to create a retirement fund. A retirement fund is a stash of funds set aside for life after paid employment, it basically takes care of our old age, when all the kids would have left for their individual families, savings helps to live out that stage of an individual’s life in peace, bliss and happiness.
THE SAVINGS POLICY
This is also known as ‘’ a savings plan’’ or an ‘’employee savings plan’’. It is a pooled investment account provided by an employer that allows employees to set aside a portion of their pre-tax wages for retirement savings or other long-term goals (i.e. paying for college tuition, purchasing a home).
It also helps firms to build up a culture of loyalty among employees. The savings policy isn’t reserved for firms alone, individuals can also have their personal savings policy.
There are a number of firms with a very strong individual or savings plan.