Right from our childhood days, our parents teach us that a penny saved is a penny earned. The phrase highlights the importance of savings. While growing up, our elders constantly tell us that we should spend less than we earn and save some portion for future use. They also teach us to spend money according to our income, and our expenses should not exceed our income. 

Today, banks and financial institutions around the world, celebrate World Savings Day to increase the public’s awareness of the importance of savings both for households and for the country’s economy. Here onwards we are going to explore some more regarding savings habits which we did knowingly and unknowingly since our little ages. Today is a great reminder to pay attention to the subject of savings.   

World Savings Day was established at the International Savings Bank Congress (World Society of Savings Banks) in Milano, Italy on October 31, 1924. It was established to promote savings all over the World. Originally the idea was to educate families, children, and thereby the whole society to save and particularly convince them of the importance of saving.

The idea of World Savings Day was established with great intentions. There had been some years where Savings Day was committed to the idea of saving money in order to gain a higher standard of life and to secure the economy. For example: In Spain, the first national Savings day was celebrated in 1921. In Germany, the confidence of people in savings had to be restored since many of them had lost their savings in the German monetary reform of 1923.

Why Is World Savings Day Celebrated?

There are many obstacles to savings for poor people since the rate of unemployment and poverty are high in many countries around the world. So, it’s necessary to educate people to save money as it is needed during unemployment, illness, disability, or old age. Savings are essential during emergencies such as sudden loss of income, medical expenses, major home repairs, etc., you will require money and it will prevent you from going into debt. Every year, the fees for education are rising so, saving money for your education is also important.

You will be retiring from work someday and so you will need savings to replace the income you will no longer get from your job. If you want to buy luxury cars and go on vacations, saving money is important. Saving for a bigger down payment will make it easier to go to your dreams.

How do savings help consumers and the overall economy?

To be sure, higher savings reserves mean that consumers have cushions that can help absorb overwhelming expenses without digging the hole deeper. But just as importantly, having a higher portion of income allocated to savings means that living expenses are kept lower and consumers can adjust their budgets to spend a larger portion of income on increased mortgage payments or better compensate if they lose their jobs.

That ability to cope with financial hardship ultimately means that the economy recovers much faster. After all, when the bills are being paid, the banks, utilities, and grocery stores can keep their doors open–and their workers employed.

With all that in mind, it’s not easy to say that savings are without risk; anyone who held stocks in their retirement accounts at the outset of the Great Recession (in October 2008) can attest to that. Even government intervention can work against savers; stimulus spending and increased inflation can both work against the power of cash savings.

How do savings save us? 

Most of us put in hundreds of hours of work each year to earn most of our money. But when you have savings and stash your funds in the right places, your money starts to work for you.

Over time, if you feel the need for a rest from all work, you can work less and less with no regrets as your money works more and more, and eventually, you might be able to stop working altogether.

In a way, you could also say that saving money helps you save the time and effort you make to make ends meet and lead a secure and relaxed life.

Written by Rtr. Sathsarani Weerasinghe