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Cape Town - Having a savings account is not meant to make your rich, according to Investments Holding Company Palengo.
In a post, it highlighted some of the advantages of saving and offered some tips to work around the disadvantages.
With July being Savings Month, let's look at the advantages of saving:
1) Emergency funds/cushion
This is especially useful for unforeseen and fortunate events, such as emergencies, job losses, business closures.
2) Short-term savings
This can be used to save for short term goals like trips, expensive items you would like to buy in the immediate future and even down payments.
3) Safety of money
Having your money in a bank, instead of under your mattress, ensures its safe keeping and helps reduce the risk of it being possibly stolen or you spending it.
4) Liquidity and convenience
Your money is readily available for withdrawals and it can be easily tracked.
Palengo also points out two disadvantages, but notes that it is easy to work around it:
a) Low returns
You won't be getting rich out of saving accounts and they are not meant to be for this purpose. For building long-term wealth rather look into alternative investments.
b) Easy to spend
Since your savings can be easily accessed, it can also be easy to spend. Discipline is needed to win at saving.
*It's National Savings Month. Do you have a successful savings plan or story to tell? Share it with us now and help others to also become Savings Heroes. For more on savings visit our special Savings Issue.
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