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Financial Education

A basic guide to understanding savings

Saving money is a crucial financial habit, which involves setting aside funds for future needs.

It serves as a means to allocate resources for pursuing individual objectives, handling unexpected circumstances, and establishing a financial safety net.

In this Education and Financial Literacy Series, we will explore the concept of savings in a simple way and present tips on commencing your savings journey.
What is Savings?
Saving involves setting aside a portion of your income or funds, such as your salary or allowances, for future use. This practice offers a sense of financial security for unexpected circumstances and paves the way for fulfilling aspirations, whether it be funding your education, purchasing a car, or embarking on travel adventures.
Additionally, savings can double as an investment opportunity, as the money you save has the potential to accrue interest over time. This approach allows you to leverage your funds to grow your wealth and let your money work for you.
Why you should keep your money in a savings account?
Keeping your funds in a savings account provides you with financial freedom, preventing the need for last-minute solutions like relying on personal credit. Moreover, it empowers you to pursue your financial goals and even venture into investments.

By leaving your money in a savings account, you earn interest on your saved amount. The interest you receive is contingent on the balance in your savings account and the duration it remains there.

However, it serves as a means to make your money work for you, generating returns even while it remains stationary.
How it works?
You have the option to initiate a savings account with Caixa, enabling you to transfer funds at your convenience. These transfers can be made via one-time or recurring orders, either in person at our branches or through our digital banking platforms, such as Caixanet or MobileCaixa. 

The interest on your account is computed based on your average balances and is disbursed according to the predetermined schedule. You can choose to withdraw the interest or allow it to accumulate as "capitalization," thus increasing your principal and generating additional interest.
Advantages of savings
Setting aside money is crucial for reaching both immediate and long-term goals. 
Building up savings enhances your financial stability in the face of unforeseen events, making it possible to realize future dreams and plans.

Here are a few benefits of saving:

  • Protection against debt;
  • Preparation to face unforeseen events;
  • Having funds at your disposal when needed;
  • Achieve financial independence.
Our tips
1.    Have a goal - Maintaining a sense of purpose is crucial for economic resilience and for minimizing or eradicating the unnecessary. Steer clear of expenditures that lack a clear purpose.

2.    Get a quote - Write down your monthly expenditures, including the smallest ones. Divide them into two categories: essential daily life expenses on one side and non-essential, discretionary spending on the other. Use this budget to implement the following:

  • Assess your monthly expenditures and determine whether any unnecessary items on your list can be cut back or eliminated.
  • Give priority to essential and structural expenses, ensuring they are paid promptly.
  • Set a limit for non-essential spending and strive not to surpass it.
  • Explore cost-effective or no-cost alternatives for your entertainment and leisure activities.
  • Regularly analyze your spending patterns and identify areas where you can reduce expenses.
  • Maintain a comprehensive record of your expenditures and compare them to your initial budget.
Remember, the key to good financial management is maintaining balance. By eliminating or reducing unnecessary expenses, you will be able to maximize your savings and achieve your financial objectives with greater efficiency.
 
3.    Adjust your expenses according to the amount of savings - not the other way around. 
To save money you need to reverse payment orders:
Begin by setting aside the necessary monthly savings amount, dedicating the remaining funds exclusively to cover regular expenses. Adjust your lifestyle and spending to align with what remains after allocating your monthly savings. 

4.    Opt for automated withdrawals to save
Caixa provides a variety of products and savings options that come with automatic growth. Simply set a specific day of the month for money to be automatically transferred to your savings account. All of this is done in a straightforward, cost-free, and efficient manner, saving you time.

We trust that this simple guide has explained the key aspects of saving and acts as a motivator to encourage you to begin setting aside a portion of your funds for future investments.
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