Can Your Savings Save You? How to Avoid Informal Savings?

Savings - Complete Controller

An important benefit of saving money regularly is that it allows you to achieve a goal, whether it is short, medium, or long term. Additionally, another benefit of saving is the creation of an emergency fund. In the United States, only 39% of adults that save use their savings to face emergencies or unforeseen events.

Better-safe-than-sorry saving

No one is immune from accidents or incidents; however, we can all be prepared to face these events with the help of our savings.  Otherwise, the event and its consequences can be very costly. Check out America's Best Bookkeepers

For example, a person without savings has an accident, an illness, loss of employment, or material damage to their property. To cope with this situation, he would have to get money from a friend or family member or take out a personal loan.  Ironically, not having savings for emergencies reduces his chances of borrowing money since a family member or an entity would charge interest.  He would then be forced to use his credit card irresponsibly and become over-indebted.

Consider saving within your budget

It is important to consider including an amount to save each month when you create your budget. This amount may vary, but it is recommended that it correspond to your savings goals. If you are saving to purchase an item, consider saving an amount large enough to include that purchase and increase your emergency fund. Check out America's Best Bookkeepers

Saving for unforeseen events

Just as the emergency fund is important, it is also important to supplement and obtain insurance, including life insurance, major medical expenses, car insurance, and liability insurance. For example, if you get into a car accident and have car insurance, you can pay the deductible and avoid incurring unnecessary debt.

Use the Savings Simulator

With a Savings Simulator, you can understand saving and investment options in the market, tips to apply before opening an account, and the main rights you have as a saver.  Similarly, the Savings Simulator allows you to make a personal savings program considering an initial investment and periodic additional contributions within the pre-established time.

Keep your money safe

Saving seems easy but takes time and effort.  Avoid informal savings plans like pyramid schemes or keeping your savings under your mattress, as both options put your financial health and family at risk.

Informal savings include:

  • Savings at home and the use of batches are the two mechanisms most used by informal savers (28% and 14%, respectively).
  • 44% (31 million) of the adult population saves in the informal market.
  • 29% of women use the savings at home and 16% the batches in greater proportion than men, while 10% of them use the loan to a large extent among individuals. Check out America's Best Bookkeepers
  • Informal savings are used for the same uses as formal savings; however, for the informal, personal expenses occupy the first place (38%), followed by emergencies or incidentals (27%) and education or health (23%).
  • Household savings is the only mechanism of informal savings that is greater in the smaller localities (31%) than in those with 15 thousand inhabitants and more (27%).
  • The use of informal savings to increase family assets, such as investing in a house or business, is relatively small (14% and 4%, respectively).
  • Regarding formal savings, 36% (25 million) adults claim to have at least one product.

The problem of informal savings is that it includes risks.  For example, in a round, the who organizes it can keep the money and not distribute it.  Similarly, if you keep your money at home, someone can enter and steal it, or you could lose it in a fire or flood.

Is it possible to save?

If you save a dollar a day, your savings becomes $30 in a month and $365 in a year. Similarly, if you save $10 a day, you will have $300 per month and $3,650 per year. Take advantage of the different options banks offer, so you can choose the one that best suits your needs and saving goals.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers