The word means different things to different people. Some think that the dress purchased at the sale was a substantial "saving". Others think that putting away $4.00 per week in a vacation fund is saving. Is life insurance saving? Is medical insurance saving?
Saving can be broadly classified as either short term saving or long term saving. Short term saving is putting money aside for use within a year or so for such expenses as vacation, automobile, or taxes. Long term saving is putting money aside with the intention of leaving it untouched for several years. Money saved on a long term basis is usually used for retirement, education of the children, emergency, or to take advantage of some special investment opportunity. Although short term saving will be discussed, readers will readily understand that references to saving programs or savings levels refer primarily to the long term savings program, putting away money for long periods of time, money that is not being saved for short term planned expenditures.
Long term saving Saving for the long term is usually accomplished through a company pension scheme and sometimes through a life insurance program. Trust company certificates, government bonds, mutual funds, and government annuities are also used to various degrees. While there are some exceptions, these savings facilities are most often characterized by a relatively high rate of interest or some other special advantage, and some element of forced saving; that is, they require regular deposits. Such savings facilities are usually used for larger amounts and are sometimes a little more difficult to cash than savings placed in other facilities.
Short term saving is occasionally accomplished by means of the jar on the kitchen shelf but more usually through a savings or chequing account at a chartered bank or trust company. Saving for a car, fur coat, household appliance, or vacation are all easily arranged through one of these facilities. The essential feature of all these savings facilities is that the money saved in them is easily transferred, that low interest is paid, and that usually no forced savings or contractual plan is present; they are best suited to saving small amounts. The post office savings bank and credit unions are also sometimes used for short term saving but are also often used for long term saving in small amounts. They. generally share the characteristics of the other short term savings facilities mentioned
Both mortgage payments, unless accelerated, and medical insurance are short term savings. Each of them gives returns in the short term which could just as well be obtained by paying rentand saving the difference or by paying medical and hospital bills.
