There is no doubt that the element of wisdom perceived by those who decide to save some of their income is somewhat obvious. It makes sense to try to accumulate wealth even if this does sometimes mean restrictions on one’s spending power.
Some people prefer to keep their little nest egg safe in their own homes- Sonja Kralj
Parents often encourage their children to save by putting some money in a moneybox and then, when this is full, to take it to the bank and start a bank account in the child’s name.
This early start to what will hopefully become a lifetime of saving is a very sensible course of action. It should instil within the young person an earnest desire to save money ‘for a rainy day’.
Hopefully, when the child grows up and starts working, this early start in the discipline of putting aside part of their income will grow into a useful and sensible habit which will prove beneficial in later years.
For instance, young people are all keen to own their own property. It makes sense to repay a mortgage leading to the eventual ownership of one’s own home instead of paying rent, as this could be described as ‘money down the drain’.
So the wise young person embarking on a new career will carry on with the parents’ initiative of putting money into a savings account at an early age and make enquiries and try to establish which is the best way forward to make interest on their savings.
Obviously, there is a certain amount of sacrifice required in putting aside some part of one’s income, thus possibly obliging the saver to cut down on otherexpenditure.
One of the ways of saving is to adopt a regular savings facility at the bank of your choice. This means less risk than, for example, investing in stocks and shares.
By investing at regular intervals, the units are purchased at different prices, thus averaging in the amounts saved and therefore reducing the risk of buying units when markets are at their peak.
Such investments are easily affordable, as the minimum investment can be as little as €90 a month. This savings facility can also be flexible as you can stop, start, increase or decrease your contributions as you deem fit at any time during the term of such a savings facility. It is also possible to be flexible about the timing of such payments.
It is a good idea to have a target sum; in other words to put aside a monthly sum to reach a target amount to be used for some planned future expenditure (such as a wedding, purchase of a car, study course). Usually, it is recommended that the investment term should not be less than five years.
If you were to invest in such a regular savings facility, one of the advantages is that you acquire a savings habit, because the contribution is usually debited to your savings or current account automatically through a direct debit facility.
Of course, some people go down the other route. They are reluctant to trust banks and also, perhaps for reasons of secrecy, prefer to keep their little nest egg safe in their own homes. The disadvantage of this is that your money is not working for you and, although it is relatively safe away from the fluctuations of the investment market, there is no growth or financial gain.
Some people also save relatively safely in ordinary savings accounts at a bank but the return on this is currently very poor indeed. However, once again, there is an element of security involved in such types of savings accounts, because you cannot lose your capital.
Although young people may think it so remote as to be unnecessary, planning for retirement is one of the most important financial decisions you will undertake. It isimportant to start saving as early as possible to be able to enjoy this time without financial worries.
Some insurance companies provide a flexible insurance savings plan that allows you to save for your retirement. Such a plan means that you are always in control of your savings, deciding how much and how often you save as well as where to invest your money.
Such plans can start from as little as €40 a month and it is possible to increase and decrease contributions at any time to suit yourcircumstances. It is also possible to choose your investments from a wide choice of funds.
It is a sensible idea to choose the bank with the best offers for long-term investment, particularly if you are planning to purchase a property and would require a mortgage for this purpose.
In starting out to invest in a savings account of any nature, it is advisable to plan an appropriate budget. You should make a comprehensive list of all your expenditure, such as rent, bills or travel and then establish how much or how little you can spare each month and that, quite naturally, is the monthly amount which you can comfortably invest.
It is also a good policy if you were going for a rather more risky investment venture, to establish whether the money you are investing is a sum which, if it were to be lost because of fluctuations in the investment market, would not put you in a position of debt.
It is healthy and sensible to adopt the savings habit as early as possible and to plan for the future so that you can find yourself in a financially secure situation, whether it is your desire to purchase a property, fund a wedding or enjoy your retirement.
Good luck with your savings plans.