Page 31 - Book2E

How We Save
When we talk about saving, we generally think of putting money in a savings account to earn interest, but there are several ways to save:
In-kind savings: Rapidly rising prices decrease the value of money that is saved. When inflation is high and prices rise continually, or when people live in an area where access to a bank is difficult, they sometimes save commodities rather than cash. Farmers may save grain. Ranchers may save cattle or sheep, which produce offspring and by-products. Even food storage by an individual or family is a form of in-kind saving as it saves the person or persons from paying higher prices a year in the future. Some people invest in
jewelry, artwork, antiques, or coins and
save them for several years until their
value increases substantially. The value of
some of these commodities increases more
rapidly than cash in a savings account.
A good deal of personal knowledge or
advice from a trusted resource is required
to benefit from saving commodities. The
disadvantage of saving commodities rather than cash is that some com- modities are less quickly converted to cash when an emergency arises.
Cash savings: It is a good idea to keep some cash where it is readily available for unexpected immediate needs. The advantages of cash are that you can carry it with you, and it can be traded for just about anything. Cash at home is easily accessed, but that also means it’s easily accessible to other people besides you. If there is a bank conveniently located, it is best to deposit most of your emergency cash there and just keep a small amount at home.
Savings accounts: This is the form that pops into most people’s heads when the subject of saving arises. These accounts can take many differ- ent forms. In addition to the standard deposit account, IRA, universal life insurance, and CDs (certificates of deposit) are all ways to save.
Saving Makes Good Cents 23
The safe way to dou- ble your money is to fold it over once and put it in your pocket.
—Frank Hubbard