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Saving versus Investing

The difference between saving and investing is time; generally, we save for short-term goals and invest for long-term goals. For example, if you have a short-term goal that you want to reach, or money you will need in an emergency, you require savings. Down payments on a car or house, or paying for a vacation, are examples of short-term goals. A long-term goal, like funding your retirement or a child's college education, requires investment with a higher risk.

Paying Yourself First

Most people include a savings plan and savings goals when creating a budget. For a student or recent grad, the most important part of saving is not the amount but simply the act of beginning to put away a little each month. Putting your money to work for you as soon as possible will pay greater dividends in the long run.

Reduce Spending

Reducing your expenses on an already tight budget may seem difficult, but even a small change can make a big impact. Simply by skipping a $4 coffee or bringing your lunch 5 days per week, you can save nearly $1000 per year. Having a grocery list will help you avoid impulse buying. When buying clothes, stick to the basics, and make minor repairs instead of replacing them. Shopping at discount stores and clipping coupons will help save even more.

Saving Options

There are four main options for saving at banks and credit unions: checking accounts, money market accounts, savings accounts, and CDs (Certificates of Deposit).

What's the big deal with saving?

It is hard to gauge how much money we are really spending per year and how much we are failing to save without a budget. With the availability of debit cards, we use less and less material cash, making it hard to notice when we are spending excessive amounts of money. With online banking, we can see how much money is going out and how much money we are putting into specific accounts.

Saving can make a huge difference in the way you see your money, your work, and your life. Starting to save today will make a big difference in the quality of life you have in the future.