Saving refers to the preservation of money for future use. Such future use might include capital and goods purchase (house, transport, vacations, etc.), emergencies, and miscellaneous expenses. Strictly speaking, saving is the difference between our income and our consumption expenditure. Besides, saving is our main tool to cope with mortgages, credit card debt, extraordinary bills, and other loans. Without savings, such debt and expenditures may sharply erode our personal finances. Saving also allows for harnessing sudden investment opportunities and to gain access to quality services. All in all, saving is a fundamental aspect of personal finance.
Money has to be tightly controlled. We must know where money comes from, and where it goes to. We must strive to know the way our money flows, the paths it travels, and the drains taking most of our income. By closely watching our money’s nature, we’ll learn to control it. Control is a keyword of personal finance. Control refers to checking the errors we are incurring with our money’s management, and to take the corrective action to rectify any deviation from our desired goals. Setting goals is other important requirement for saving, and it answers the question what are we saving for ?