Savings: Finding the right balance

Is it possible to be too frugal when it comes to making savings? Its obvious that we should all think about being careful with our money, especially in the recent tough economic times. But, could it be a bad idea to fill your savings accounts too high and end up costing you in the long run while affecting your financial security?

Being wise with your money is very important, but it’s also wise to take a step back and see the bigger picture. These days, the amount of money one can earn in a savings account is low, as interest rates have continued to fall in recent times.

Despite savings accounts being able to provide high returns, they are still an important element to a stable financial lifestyle offering a safe, risk-free method of putting money aside while earning a guaranteed return.

While some people use the savings approach to build up funds in order to make a large purchase, they should also be thinking about storing cash away for unexpected emergencies. This could save you money in the long-run, as it should help you to avoid going into debt – which most of us will have already learned can cost us significantly.

When it comes to putting money away towards a retirement fund, its a good idea to contribute enough to see the maximum match from your employer. Failing to take advantage of the full contribution will mean you will miss out on free money.

Another area that is popular with consumers for saving a buck is insurance. While all insurance types can prove to be expensive, it is far lower than the potential cost of not having it. If you’re prepared to opt for lower (or no) cover, you must also be prepared to face the consequences should you need to make a claim.

In an unpredictable world, life can easily change. Whether it’s illness, a car accident, fire, flood or unexpected death, consumers and families can easily fall into into bankruptcy if they fail to purchase the necessary insurance. Therefore, it simply isn’t worth taking the risk, just to save some money.

With many of us feeling the pinch after the recession, a new ‘vouchers’ culture has begun to emerge, allowing consumers to make all kinds of savings on their every day spending. While some of us may be tempted to part with our money simply because they have found a bargain, it is important to find the right balance in order to actually make a saving.

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