Reasons/benefits of savings Flashcards
What are savings?
Savings are the unused portion of disposable income
- the money people keep for use at a later stage
Reasons for saving
Why do people save?
- to finance unforseen or unexpected expenditure e.g. medical bills and car repairs
- finance the purchase of expensive items e.g. a house
- provide collateral for a loan
- improve their education
- pay for their child’s education at tertiary level
Why do people save?
- to invest in securities such as company shares, government bonds and treasury bills, to earn income
- provide financial security following retirement or loss of work
Why do people save (general answer)
People save for different answers, which are usually concerned with increasing a sense of worth and security
What benefits so savings bring for an individual
- better able to satisfy needs and wants
- having a greater sense of security
- develop self-control ans discipline
- able to consider early retirement
How can savings benefit a country
- individuals are investing in local companies
- investment in government bonds and treasury bills
- provide govenment with funds to invest in the country
How can savings benefit the region?
- investment in local businesses benefits the region
- allows businesses to expand and so create employment
What factors influence savings
- individual’s ability to save depends on the size of disposable income
- disposable income is affected by trends in prices of food, housing and utilities
- individual must have personal committment to limiting spending and consumption
- individual belief that savings will bring greater benefits in the future
Keeping cash at home is a a form of savings.
True or False
True
What are the disadvantages to saving by keeping cash at home
- money is vulnerable to theft
- does not attract any interest
Name facilities for savings
- commercial banks e.g. Scotiabank
- life insurance companies e.g. Tatil,
- finance houses
- credit unions
- friendly societies
- investment trusts, unit trusts
- building societies
What forms of savings do commercial banks offer
- savings deposits
- term deposits
- retirement savings plans
What forms of savings can you get from life insurance companies
- retirement savings plans
- endowment plans
What form of savings do financial houses offer
Term deposits
What form of savings do credit unions offer
- shares
- deposits
- savings
