Whether saving for higher education, a new home or your retirement, having clear savings strategies help you prepare for tomorrow, starting today.
Savings play a key role in meeting financial goals. You can use savings to meet both expected and unexpected needs. In case of emergencies and crises, savings enable you to respond immediately and, over time, recover from related loss of income or property.
A savings plan is a critical tool for managing money to meet short-, medium-, or long-term financial goals. To make a savings plan, follow these steps:
1.Set savings goals.
2- Figure out how much you need to save over what period of time.
3- Decide where you will save.
4- Identify places to save, available savings products, and their pros and cons. Plan how much and how often you will save.
5- Keep track of your savings.
Informal savings include saving cash at home, which keeps your cash very accessible and allows you to avoid the transaction costs associated with saving at formal savings institutions.
Disadvantages of Informal Savings:
Saving in-kind (gold, livestock or land is another form of informal savings).
Semi-Formal savings encompass deposit collectors and group savings mechanisms, including rotating credit and savings associations (ROSCAs) called committees in Pakistan, village banks, solidarity groups and self-help groups.
The advantage of ROSCAs is that each member receives a lump sum of money at one time, with no loan or interest payments.
The disadvantages of limitations of group savings include instability of the groups, disagreements among members, members typically do not earn interest on money they have saved and limited access to funds.
Formal savings involve financial institutions, including banks, post offices, microfinance institutions, credit unions or cooperatives. Savings in these financial institutions are generally safe and earn interest. They offer a wide range of savings accounts tailored to different financial needs.
An account is opened when a customer entrusts an amount of money to an institution from which customer can make withdraw or add more funds. In Pakistan, you can have an account at the post office, a Microfinance Institution or any branch of a commercial bank like so many of those that keep advertising on TV.Bank accounts differ in their types and characteristics. Some examples of accounts are:
Senior Citizens Account
Basic Bank Account
In order to facilitate ease of banking facilities use, all commercial banks operating in Pakistan have introduced Basic Banking Accounts (BBA) facility with the following features
|I barely have enough money to feed my family and pay for other basic necessities.||Start setting aside something, even if it is only a very small amount, every day or every week. The amount will grow.
Look hard for ways to cut unnecessary expenses.
|When I save, my husband always asks to use the money I have saved.||Keep money in a secure location, preferably out of the house so it is not accessible. Open a bank account.|
|My income is irregular.||Save different amounts each time you earn some income.|
|Must use all the available earnings to pay off debts.||Make a schedule to pay off the most expensive debts first.|