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Spending Vs. Saving Money 3 Pages 712 Words
Should you buy the new Louis Vuitton wallet or should you just stick to the perfectly fine Guess wallet you have? Saving seems to be a problem with adults, mainly the young and feckless ones. After interviewing some colleagues, the results were that saving was not an important factor in their lives as to spending was. A number of these students that had some sort of income mentioned that since they have a source of income, they should be able to spend it however they prefer. In the real world, you should be spending on things that you need instead of the things you want. Also, spending more than you make is never a smart idea and could lead to bigger issues. One mistake many young adults and college students make is that they do not save any money they have earned. Most people today have trouble controlling their expenses; managing their budget must be mastered. Using your money on things you need and using it on the things you want have two different meanings. To need something is something a person must have or something a person can't live without. Water is an example of something a person always needs. A person can live without water for a couple of days but eventually, he will need to drink it in order to survive. To want something is not necessarily something you need but rather something you strongly desire. A person needs clothes to survive but he does not need clothes with a designer label on them. Besides basic needs, everything else is not necessary. Dividing these two aspects into your brain will help determine the important things you will be spending your money on and decrease spending your hard earned money on things you don't really need. To not spend more than you make is one important principle regarding the use of money that will help improve your financial situation. It is common for people to use the maximum limit of their credit card and only pay the minimum amount every month which usually abou...
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saving money Vs spending money essay .Kindly rate for band 9
Question :Some people think that they should spend money they earn now enjoying life,while others think that money should be put into savings for future.Discuss both views and give your opinion.
It’s quiet apparent that many people earn sufficient money compared to last generation. There is also a debate whether we should lavishly spend money we earn or make some investment for upcoming generation. I strongly agree the fact that we should save the money we earn for the betterment of our kids and even ourselves.
Firstly, It is always good to save a part of our income for future use. As an illustration there are many people working in IT industry and their job is not always permanent. They have to face recession and layoffs at any point of time. If it is business it depends on market shares, and in agricultural field income is completely dependent on rain and climate. and also medically emergency can emerge even for people with younger age. So from all these facts we could clearly understand the need for saving our income.
On the contrary, We earn money only to live a luxurious life. In this modern society it has become a trend for everyone to dine out frequently, visit pubs,shopping malls, purchase fashionable products and plan world tour at least once in six months. People usually work in a stressful environment 5 days a week and they tend to enjoy the weekend to the core. According to a recent research, number of youths spending their hard earned money for enjoying life has increased drastically compared to previous years.
To conclude, even though spending money keeps us happy, its negative aspects overpower the beneficial ramifications. Hence it can be stated without a shadow of doubt that saving money for future will give us a confidence to face all the unexpected situations.
TOEFL listening discussions: How does Dr Beech characterize the assistantship?
Hi Vinoth, I thought your essay was pretty good. You have addressed the prompt correctly and discussed both views as required. Your essay doesn’t really follow your thesis statement that well though, as you don’t talk about saving to better the life of of the next generation. Instead you focus on preparing for possible future calamities, which is fine, but your thesis should reflect this. Your writing is pretty clear, but you do have a lot of small mistakes in grammar and word usage, especially with your articles, which makes much of your essay sound somewhat unnatural. Overall, I think I would rate this a band 6.
IELTS Writing Samples by topic
It is better to save money than to spend it. how far do you agree with this statement is saving more important than spending in today’s world give reasons for your answer, and provide ideas and examples from y, it is better to save money than spend it. how far do you agree with this statement it saving more important than spending in today’s world, it is better to save money than to spend it. how far do you agree with this statement is saving more important than spending in today’s world give reasons for your answer, and provide ideas and examples from your own, it is better to save money than to spend it. how far do you agree with this statement. is saving more important than spending in today’s world., it is better to save money than to spend it. how far do you agree with this statement is saving more important than spending in today’s world, it is better to save money than to spend it. how far do you agree with this statement is saving more important than spending in today's world, you should spend about 40 minutes on this question. it is better to save money than to spend it. how far do you agree with this statement is saving more important than spending in today’s world give reasons for you, it is better to save money than to spend it. how far do you agree with this statement is saving money more important than spending in today’s world give reasons for your answer, and provide ideas and examples from yo.
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Financial Education: Saving Money vs. Spending Money
There’s never a bad time to start saving money. Yet, saving money isn’t as easy as just putting a stop to all your spending. It’s important to strike a healthy balance between saving and spending. Continue reading this blog to find the right balance between spending and saving money that fits your lifestyle and needs.
Most people are aware that saving money is an important goal. There are plenty of reasons for saving your money, including for pursing bigger goals like buying a car or home as well as simply having an emergency fund for unexpected and costly occurrences.
Yet, saving money isn’t as simple as the reasons for why we should. Depending on your financial situation, saving money can seem impossible. You’re not alone — 70% of Americans have less than $1,000 saved up . That’s less than the cost of a major healthcare procedure or car repair. If you’re hoping to get your savings in shape, breaking down the nuanced differences between spending and saving is the first step.
Why Save Money At All?
If you’re not entirely convinced about why you should stash your money away instead of spending it, consider these important and often overlooked reasons for saving. When you save your money diligently, you’ll get:
- More peace of mind knowing that you can afford unexpected emergencies.
- Increased discipline that helps you pursue long term goals instead of short term pleasure.
- More freedom to make major life changes, like quitting your job, moving to a new city, or getting married and having children.
- More money!
There are plenty of reasons that make saving your money worthwhile and not all of them are immediately financial, but instead offer personal success through building your discipline and financial savvy.
Spending and Saving Mean Different Things to Different People
The important quality to understand when to save and when to spend is relativity — what’s expensive and wasteful for one person might not be for another person. For some people, spending the extra money to have their groceries delivered allows them to take that time and make more money than they spend on the delivery. Yet, for another person, that delivery will cost them more than they would normally earn in the time it would take for them to do their grocery shopping. In this example, spending is saving for person A, while spending is not saving for person B.
When it comes to deciding the right course of financial action for you, it’s crucial to calculate the cost and benefits based on your own unique situation. Create a framework for judging your financial actions where you easily deduce whether spending or saving will amount to a financially sound decision based on your needs and lifestyle.
When to Spend
Spending money seems like the easiest action, so why bother thinking about when to spend? Being conscious of the way you spend your money and when is a vital step towards financial literacy.
Saving and spending simply isn’t as easy as always saving or never spending. There are plenty of reasons that justify spending money; a car repair, a doctor’s visit, even a gym membership. In some cases, spending can be seen not just as a loss of money, but as an investment. When you spend money to protect and improve your health, this is money well spent that ultimately pays off in the long run.
For example: neglecting to perform a repair on your car now can save you money in the short term, but if that mechanical issue worsens in the meantime, you’ll end up spending even more on a major repair later on. In this case, spending money would save you more money in the long run.
Getting Serious about Spending vs. Saving
We all want more money in our lives, but the way each person goes about improving their financial situation will differ based on their lifestyle and needs. At the Community Currency Exchange Association , we know that every individual approaches money differently and needs the flexibility to handle their finances in the way that best serves them. Whether you need money services like check cashing or payment services like money transfers, we aim to make your financial life easier. Find a Currency Exchange location near you to get ahead on achieving your financial goals.
With over 350 locations, many open nights, weekends, and holidays (and several stores with 24/7 availability), you can rest easy knowing your financial needs can be taken care of when you need them most. We’re in the heart of every community. Don’t believe us? See for yourself.
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Is it better to enjoy your money when you earn it or is it better to save your money for some time in the future? Use specific reasons and examples to support your opinion.
English writing practice: topic 32 – sample 1.
“Save it for rainy day,” That’s my motto. When I have a choice between spending my money or putting it in my savings account at the bank, I always put it in the bank. I will have a lot of expenses in the future like my education, travel, and unforeseen emergencies. I need to have money set aside for these expenses.
Education is expensive. I can’t depend on my parents to pay all my bills. I have tuition, room and board, books, and incidental expenses to pay for. I’ll try to get a scholarship to cover some of these costs, but I know I will be responsible for a lot of the expenses. If I spend my money now, I won’t be able to pay for my education.
I need to save money for my education. Travel is also very expensive. I don’t mean vacation travel. I mean travel to get to and from school. Transpacific airfare costs a lot even special reduced fares. I first have to get to school and then, of course, I want to return to my family for important festivals and occasions. Going back and forth will be costly, but worth it. I need to save money for these trips.
Emergencies could arrive at any moment. I might have an unexpected illness while I am at school. There might be costs that aren’t covered by the school insurance. One of my family members may need help. I will have to send them money. You can’t predict emergencies like this, but you can be prepared. I need to save money for these emergencies.
When you are not rich, you cannot spend your money carelessly . You must plan ahead. I know in my life, I will have expenses for my schooling and for traveling to and from my home. I know that I will also have unexpected expenses related to unforeseen emergencies. I must be prepared. I need to save money for these events.
English Writing Practice: Topic 32 – Sample 2
When faced with the decision of saving your money for some time in the future or enjoying your money when you earn it, quite a few would claim to enjoy their money, but others, in contrast, deem to save their money as the premier choice and that is also my point. This quite different view is based on the every possible reason.
Foremost reason for saving the money for future use is when you need a lot of money to deal with some emergent things that happen to you, you should not worry about the fund or lend some money everywhere at that time. For example, two years ago, I spend my summer holiday in a famous scenery pot, after a wonderful trip of the first day, I lost my wallet unconsciously, then I took out some money in the bank to finish the trip. If you did not have some deposit, you can imagine how embarrassed you are.
Second, I have finished my college study, and I am going to go abroad to get a master degree to enhance the ability to face the challenge in the society. Plenty of money is very important to me, so I have to save all the money that I economized for future use.
Third, the economy condition of my family is not so good that I decide to earn enough money to buy a big house for my deeply loving parents.
This is arbitrary to judge saving money for future use according only to the excuse I mentioned in the above paragraph. But I do not deny that enjoying the life is also important to everyone because of brief life. That is to say, I will enjoy my money if I deposit enough.
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Saving Money: Approaches and Importance
- Categories: Money
About this sample
Words: 714 |
Published: Sep 5, 2023
Words: 714 | Pages: 2 | 4 min read
Table of contents
1. approaches to saving money, 2. the importance of saving money, 3. balancing saving and spending, 4. cultivating a savings mindset, conclusion: a secure and fulfilling future.
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What Is Saving?
Pros and cons of saving, what is investing, pros and cons of investing, when to save and when to invest, the bottom line.
- Financial Literacy
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Saving vs. Investing: What Teens Should Know
Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.
Saving vs. Investing: An Overview
Understanding the difference between saving and investing is essential to ensure financial security and a bright future. Though these terms are sometimes used interchangeably, it is important to note that they are very different. Both savings and investing are critical elements of personal finance, and starting early is a great way to set oneself up for long-term financial stability.
In this article, we will cover what saving is, what investing is, and the pros and cons of each, along with examples to help understand these concepts better.
- Saving money means storing it safely so that it is available when we need it and it has a low risk of losing value.
- Investment comes with risk, but also the potential for higher returns.
- Investing typically often comes with a longer-term horizon, such as for children's college funds or one's retirement.
- Both saving and investing are key pieces to one's personal finances.
People save money for both purchases and in case of emergencies. Saving is an essential part of personal finance that involves setting aside money for future use. Think of it as putting your money in a piggy bank, but instead of an actual piggy bank, you can use a savings account or a certificate of deposit (CD) that earns interest over time. You can save for different reasons, such as buying a new gadget, going on a vacation, or having an emergency fund for unexpected expenses.
Saving is an excellent way to meet short-term financial goals and prepare for unexpected situations, such as a car repair or medical bills By putting aside money regularly, you can build up a cushion that can help you weather tough times. Savings are generally low-risk, meaning your money is safe, but the interest rates received are also low.
Generally speaking, short term is considered to be periods of around one year or less. Keep in mind when you will need funds, what your plan is for the funds, and the safety/risk associated with the goal.
One example of saving is setting aside a portion of your allowance or paycheck into a savings account every month. Let's say you want to save $1,000 for a new laptop, and you have ten months to do so. By setting aside $100 each month, you can reach your goal without having to pay interest on a loan or a credit card.
You can also use automatic transfers to ensure that you save consistently without having to remember to do so manually.
Saving has many benefits such as providing a financial safety net for unexpected events, liquidity for purchases and other short-term goals, and being safe from loss. However, there are also some drawbacks to consider, such as missing out on potential higher returns from riskier investments. Savings can also lose purchasing power caused by periods of rising inflation .
While saving is a crucial part of any financial plan, it's essential to combine it with other forms of investing, such as retirement accounts or investing in the stock market, to achieve a balanced approach to financial planning.
Builds up an emergency fund
Funds short-term goals like buying groceries, a new phone, or going on a vacation.
Minimal risk of loss. Savings held at banks are protected by FDIC.
Much lower yields
May lose out to inflation
Opportunity costs when not invested in riskier but higher yielding assets
Investing is a way to grow your money over time by putting it to work in financial instruments such as stocks , bonds , and mutual funds . Unlike saving, investing involves taking on some risk, but it also has the potential to earn higher returns over the long term.
Investing is a way to reach long-term financial goals, such as saving for college, a down payment on a house, or retirement. Because investing involves taking on some risk, it's essential to choose investments that align with your goals, risk tolerance, and time horizon. In general, the longer you can invest, the more risk you can take on, because you have more time to ride out the ups and downs of the stock market.
For instance, let's say you want to invest in a company like Apple. By buying shares of its stock, you own a tiny piece of the company and can benefit from its growth and profits. If Apple performs well, the value of its stock could increase over time, allowing you to sell it for a profit.
One important thing to remember is that investing comes with no guarantees, and there is always the risk of losing money. For example, if Apple were to go bankrupt, your investment could be almost worthless. That's why it's essential to diversify your portfolio by investing in different companies and industries to reduce your risk.
Using a 401(k) retirement plan is a good example of investing as it involves setting aside a portion of your income to invest in a diversified portfolio of stocks, bonds, and other financial instruments with the goal of growing your savings over time.
A 401(k) plan is a type of retirement account offered by many employers as a benefit to their employees. You contribute a percentage of your salary to the plan, and your employer may match your contribution up to a certain amount. The money you contribute to the plan is then invested in a portfolio of mutual funds, stocks, and bonds that are chosen by the plan administrator.
The key advantage of using a 401k retirement plan is that it offers tax benefits. The money you contribute is deducted from your taxable income, meaning you pay less in taxes. Additionally, the investments in your 401k grow tax-deferred , which allows your money to grow tax free over time and potentially earn higher returns than a traditional savings account. Taxes are not due until you start drawing money from the account.
Investing in a 401(k) plan highlights the importance of starting to save for retirement as early as possible. By investing consistently over time, you can benefit from compounding returns and potentially grow your retirement savings significantly. It's also important to choose a mix of investments that align with your risk tolerance and retirement goals, and to regularly review and adjust your investments over time to ensure they continue to meet your needs.
Financial experts do not recommend keeping very much of an investment portfolio in cash, because it can create " cash drag " and lower the potential returns of your portfolio.
Investing has the potential for higher returns than savings accounts, the ability to grow your wealth over time through compounding and reinvestment, and the opportunity to help you achieve long-term financial goals, such as saving for retirement or buying a house.
However, there are also some cons that should be considered. Investing always involves some level of risk, and there is no guarantee that you will make money or even get back what you've invested. Diversification across several holdings can help. It's important to do your research and understand the potential risks associated with different types of investments. Investing requires discipline and a long-term perspective, which can be difficult for some people to maintain in the face of market volatility or the temptation to follow the crowd in an attempt to make quick profits.
Potential for higher returns than savings
Can help achieve long-term financial goals
Diversification can reduce risk
Risk of loss, especially in the short-run
Requires discipline and commitment
May require longer time horizons
One of the most common questions that people ask is whether they should save or invest their money. The answer to this question will depend on your particular financial situation, goals, and risk tolerance.
When you are young, you may have limited income and expenses, but it's never too early to start thinking about saving and investing. In fact, starting early can give you a significant advantage in building wealth over time. Investing can help you fulfill long-term goals, such as saving for college or retirement. As a young person, you have time on your side, which means you can take more risks and invest in riskier assets. Even if you suffer losses in the short-term, you have more flexibility to recover and benefit from the positive effects of long-term investing. In other words, by investing early and regularly, you can take advantage of the power of compounding, which means your money can grow exponentially over time.
As you get older and have a shorter time horizon , experts recommend shifting out of riskier assets like stocks and into more conservative ones like bonds and cash. This is because short-term volatility is more of a potential risk if the market crashes just as you're about to retire.
Even for younger individuals, saving is generally a good idea if you have short-term goals, such as saving for a new phone, laptop, or a vacation. Saving means putting your money into a safe and low-risk account, such as a savings account, money market account , or a certificate of deposit (CD). Savings products generally offer low returns but they also come with low risk. They are a good option if you need to access your money in the near future and can't afford to lose any of it.
Investopedia / Alice Morgan
Before you put any money into investments, be sure to have enough savings put away in an emergency fund to cover several months of expenses, and enough money in your savings account to cover all of your short-term needs like bills, rent, and groceries.
Which is riskier, saving or investing?
By definition, saving entails very little risk. Investing, on the other hand, comes with the risk of losing money. Therefore, investing, in general, is riskier than saving.
Why do some people prefer to save rather than invest?
Some people may choose to save rather than invest for a variety of reasons. Some people prefer the sense of security of having more money set aside in a savings account for unexpected expenses or emergencies. Others may have a larger number of short-term financial goals, such as saving for a vacation or the down payment on a house, and prefer to keep the money in a low-risk savings account. Additionally, some people may not have the knowledge or expertise to invest, or they may not feel comfortable with the level of risk associated with investing due to having a low risk tolerance . Finally, some people may simply not have enough money to invest after covering their essential expenses.
How much money should be saved vs. invested?
The amount of money that should be invested versus saved depends on one's individual financial goals, risk tolerance , and personal circumstances. A good rule of thumb is to save enough to cover three to six months of living expenses in an emergency fund; a savings account, with enough to cover short-term obligations like bills, and then invest the rest. The specific amount that should be invested versus saved will thus vary depending on factors such as age, income, existing debt, and long-term financial goals.
Why do some people fail at investing?
There are several reasons why people may struggle with investing. One common reason is a lack of knowledge or experience, which can lead to poor investment decisions. Additionally, emotional biases, such as fear or greed , can cause investors to make impulsive or irrational decisions that may result in losses. Successful investing requires a long-term perspective, discipline, and patience - and it can be difficult to stay the course during periods of market volatility.
Saving and investing are both important components of a healthy financial plan. Saving provides a safety net and a way to achieve short-term goals, while investing has the potential for higher long-term returns and can help achieve long-term financial goals. However, investing also comes with the risk of losing money. Each approach has its own pros and cons, and it's important to find the right balance that works for your financial situation and goals. Ultimately, a well-rounded approach that includes both saving and investing can help build wealth, protect against financial shocks, and provide a solid foundation for a more secure financial future.
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