With a fluctuating economy, itâ€™s crucial to maintain a balance between saving and investing. Both can help you attain your goals and improve your quality of life but in vastly different ways. We list six reasons why itâ€™s important to both save and maximize your hard-earned dollars.
Saving is the act of putting money away for future expenses while investing involves putting money towards a financial product with the expectation that it will grow and earn returns. By saving money, a person knows where their money is going and when itâ€™s spent. Funds in a savings account provides guaranteed peace of mind and allows you the flexibility to spend as you please. However, itâ€™s important to know that with saving youâ€™re not enabling your money to work for you. You lose the potential for your cash to grow.
2) Safety Net
Having the same job for your whole life is not a familiar concept in todayâ€™s world. To that end, the transition between jobs or careers sometimes isnâ€™t as seamless as one would hope. Severance packages and social safety nets ease possible fears but having cash and investment returns at hand can make a huge difference.
A car. A wedding. A home. Childrenâ€™s education. All of these rungs on lifeâ€™s ladder can force you to dip into your savings or get a loan. Investing years ahead of time in order to prepare for some of these expensive but life-enriching endeavors is a must. Investments may not totally cover these costs, but they may help you reach your goals faster.
4) Vacation Planning
The nine-to-five rat race can be an incredibly stressful routine with more time spent commuting than with the family. Having a portion of money saved for vacations means you can escape without having to pay for the trip with plastic (and interest down the road).
5) Preparation For Lifeâ€™s Surprises
The old adage states â€ślife is what happens when youâ€™re busy making other plans.â€ť Having savings to deal with rainy days â€” from fender benders to possible health scares â€” prepares you for lifeâ€™s surprises. Locked-in investments might not be the ideal resolution for these situations, so short-term investments with a quick, painless exit strategy can come in handy.
6) Retirement Planning
While saving can help you achieve your short-term goals like buying a car, money you invest can be used for long-term goals like retirement. Itâ€™s been previously reported that a typical middle-class Canadian couple needs a minimum of $42,000 a year to live comfortably ($30,000 for singles). Put simply, thatâ€™s a lot of money. Investments, however, can help you earn returns on the cash that you put aside, making your financial goals more achievable.
Develop a financial plan that works for you. Book an appointment with a Scotiabank financial advisor and ask about the Scotiabank Momentum Savings Account.