We all like to save, right? At least in theory! We all try to save what we can here and there, but we find it almost impossible to make it last. Something always comes up like doctor bills, braces, car wreck! It seems almost impossible. Not to mention, that when we put our finances in savings it seems stagnate. We need to find a way to make our savings productive and see a return on such savings. We look for banks with high interest earning potential and so forth. Have you ever thought about investments? Businesses also go through the same thought pattern when savings and so does the government. “What to do with savings,” seems like a popular and frequently visited question.This is an intro to some finance or financial techniques. This is a multi-series in the world of finance!
Let’s take a look at a real world example of individuals, businesses and possible savings opportunities.
Mr. Jackson wants to buy a new motorcycle and decides to start saving! He puts his money in the bank which accumulate interest over a period of time let say a year. This money accumulates on the interest rate and the pot grows overtime. Four years from now he buys his brand new Suzuki GSXR 750.
Mr. Jackson wants to save his money for a motorcycle! Instead of just putting it into a bank account, Mr Jackson decides to be more proactive on how the pot grows (It could work even if he didn’t know what he was saving for, even in the previous example). This way the money is more proactive with his involvement.
ABC’s Underwater Basket Weavers decides it has some free cash flow and the company wants to use the monies on new needles for the weaving impaired or buy new property with equipment. Yet, they aren’t ready to buy these additions to their business. They decide to place these assets in short-term investments to proactively play a role in such savings.
Understand, that this is a very basic scenario of finance, but the principle is the same. This author writes not just for businessmen and entrepreneurs, but the consumer as well. Ask yourself…. how am I taking control of my savings? Can I benefit for productively taking role playing the financial market?
These answers will be visited again in the second part of “Saving And Staying Productive.”
*Accounting Students, Business Students, Small Business Start-Ups, below are some links that may become useful for you*