As you may know, the world we see today faces a long list of challenges. One of the most recent includes global recession and inflation. So, what as an individual you can do to mitigate the challenge fallen upon you? This article will help you develop a deeper insight into financial literacy so you can be able to make better decisions financially.
What’s Saving Money?
It’s the typical “piggy bank” thing you do. For the most effective money-saving results, you might want to follow the 80-20 budget rule. For this rule, you need to first make choices around your expenses. You need to spend only 80% of your money on your expenses and save the rest of it for your savings. It is best to have your finances automated and regulate your paycheck in such an order that you can automatically direct the 20% to your savings account. Do this right as you receive your paycheck so you don’t end up overspending.
Benefits of Saving Money
Some benefits of saving money include a big chunk of emergency funds that you can use in need. The money is right there available for use and it comes in handy in times of crisis. Also, with abundant savings, you may eventually think about making a big investment, which we will discuss now.
What is Investing Money?
Investing money is like saving money on a big scale, only with added bonuses over time. It is like you get the reward for not spending a chunk of your money which only gets bigger with time. Instead of letting your cash stay dead in banks, you invest them in assets such as stocks, real estate, gold, and more. This way, the value of the assets may increase over time and by the time you are about to sell your asset, you will learn you are going to get more money. The important thing to know is when is the best time to buy and sell in terms of investing to maximize your gain.
Benefits of Investing Money
Investing money has benefits far superior to saving money. You do it as a form of earning passive income. With the right tactics, you may even be able to build an empire out of it. That is why if a business gets successful out of investments, it changes the whole dynamics of the individual for generations to come.
Why is Investing Better than Saving?
With time, inflation increases, and taxes also increase, which automatically lowers the value of the cash lying in your bank in the form of dead money. If you could buy real estate out of the cash you had back in 2019, you might not be able to buy your desired property some years later. Investments don’t backfire in this way. On a time scale, they only grow and prove to benefit you if you take the right steps in terms of buying and selling. This is why investing money is far better than saving it.
Final Words
Saving money and investing money are two different terms, and each has its own benefits.
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