Savings is the practice of putting cash aside in a safe place like a bank so that one can use it at a later date. Savings can either be for security and safety reasons or for planned future expenditure. Security and safety reasons could include medical and any emergencies. One could also save cash to buy a house or any other tangible assets. Different people save in different ways and for different reasons.
Savings habits can also be influenced by the culture of the community one lives in. Savings can be in liquid cash or other assets like land, animals and poultry, trees, buildings and shares among others. The format the savings take is often influenced by the risk appetite of the person making the savings.
Savings is important as it makes one start thinking of how to invest the savings to earn a return. It makes one to start thinking of how to create more wealth through investments or acquisition of property. This type of thinking is only possible if one has savings. The people who have no savings tend to spend whatever they get as the habit of savings is not in their mind.
There many reasons for savings but the following are the major ones;
- Education for the family members
- For acquisition of tangible properties like land and houses
- To take care of emergencies
- To meet fixed family expenses
- For retirement
- To acquire shares in traded companies
- To accumulate capital to start a business
- To meet future medical bills
- To acquire a family car
- To finance a touring trip abroad.
The habit of savings is very important for the economic development of the country . Investments in the production of goods and services is possible through savings. For example the money which the banks lend out to the individuals and business community to finance projects is a result of the good habit of savings by the members of society. It is important therefore for every one to save in order to succeed in increasing the wealth of the country.