Looking closely at this mathematical formula we conclude that savings are higher either the higher the income or the lower the consumption, that is, by increasing the income in relation to consumption we have a superior saving, as well as, reducing consumption in relation to income we also have savings.
Although the mathematical formula is simple to interpret the truth is that the income influences the consumption thus allowing to create a kind of direct relation. In other words, an increase in income leads, in most cases, to increases in consumption, making the increase of savings residual, removing the proportionality effect at first sight. Likewise, with the existence of banks, households and individuals with increased incomes weigh the future consumption needs by anticipating them by contracting credit for this purpose. leading us to believe that households’ ability to save depends on their ability to decide whether to consume in the present or to consume in the future.
So, do you really know what savings are?
Savings is Financial Planning
Definitely the ability of families to plan for the different time horizons both the savings and the variables that influence it, which defines their financial success.
Planning is to monitor, strategize and set goals for this simple formula. It is to set priorities and set goals. When this capability is in place, it is easier to manage the concept of savings and achieve positive results through correct management of consumer desires and savings needs.
Savings and Security
The need for security may in some families be a motivational factor to achieve financial success, leading them to plan for the future with a view to improving financial security.
In the same way, that we are all concerned with the planning of the reform, relieving ourselves of financial products for this purpose, also other areas of our financial life should be analyzed, such as protection against the eventuality of unemployment, education of children, planning the purchase of housing, protection for health needs, emergency protection of different types.
How can you verify the savings is much more of positive net worth, rather it is the security of present and future liquidity.
Saving is Profitability
The different opportunities to monetize household surpluses are publicly available. We have time deposits, bonds, stocks, investment funds, savings certificates, among others. The truth of each is the need for minimum investment amounts.
Money does not come out of anywhere, this is necessary, in the vast majority of households, an increased monthly effort to accumulate savings levels for access to interesting investment products.
Therefore, saving is profitability. It is much more than liquidity is the possibility of multiplying through the different types of existing capital remuneration.
Savings and Development
The saving of families ends up developing other areas of the economy. When families allow themselves to save money to create savings together the banks are literally financing the economy.
They are allowing companies and others to seek liquidity or develop investment strategies taking into account foreign capital.
Saving is the engine of the family economy and the global economy.