Understanding Savings And Investments

At twenty, many think they can save the world. At thirty, people are happy if they can save part of their salary. The common excuse why people don’t save as regularly as they should is they don’t have enough money in the first place. They complain that their salaries or earnings are hardly enough to cover their daily expenses, let alone save some of their money. Little do many realize that the first step to financial freedom is spending less than what they earn and do it for a long, long time. It takes patience and perseverance to set aside one’s savings in a bank and not spend it for the slightest excuse.

Whenever there is money coming in, people should save part of it as savings. For example, payday advances are usually gotten because of cash emergencies or unexpected expenses. If possible, save some of the loaned amount to be used for another day. The point is, people should make a conscious effort to save a certain amount of money—from various sources, if necessary—and do it consistently for a long time.

Aside from savings, people could also try investing. It seems scary to invest nowadays, with the economic slowdown still raging, but it is still a viable financial move. Simply put, investment is something that people “purchase” with the intent to resell for a higher price, for a profit, in the future. It could also be something that generates higher returns. However, not everything a person buys is an investment.

For example, Miss A has a beautiful set of earrings. One day, her friend, Miss B, sees the gorgeous earrings and says to Miss A, “Wow! Love your earrings! You can sell that for a good price!” However, Miss A is unwilling to sell the beautiful earrings because it was a gift from her mom so it has sentimental value. The earrings of Miss A cannot be categorized as an investment. Instead, it has become a liability because it does not generate income for Miss A. Therefore, earning something from what one buys is the true essence of investment.

In another scenario, if a person takes out a fast cash loan and puts the money in the stock market that could be taken as an investment. Although the loan is to be repaid in time, the money invested is already earning through interests. To recap, spending less of what people earn means savings and putting money to use is investing in the future.

By: Greer Lean

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Johan Kriegbaum, online marketing manager of Payday Cash Loan, Australia's preferred short term lender, shares his insights on money matters. Founded in 2005 Payday Cash Loan has helped thousands of Australians with their fast cash loans but that's just the short term solution.