At some point in your life, you’ll have your own paycheck and that is where you will start asking questions about where to put your money.
Don’t worry it’s a common problem among people who haven’t had any formal education about financial literacy. But things like savings, investment, and insurance shouldn’t confuse you anymore. Knowing the difference between these 3 can help you put your money where it’s worth.
Savings are funds that can be available anytime you might need it. The purpose of savings is so you can have it in a short time frame. It can make you financially strong and secure Here are important reasons to save money:
- Emergency fund
Everyone should have one in their savings account. This type of savings prepares you for a situation where you might need money immediately. Emergency funds can be used to pay a health-related emergency, unexpected repairs, and some travel arrangements.
- Down payment for a house
When you have a significant amount of down payment, it gives you a better negotiating power. In addition, you will receive better interest rates and be able to afford a bigger home. Saving for a house allows you to move into a better neighborhood and make it easier to get your dream house.
Although education is needed, it can still be reasonably expensive. You might want to start saving for your child’s education when the time comes. There are several options available if you decided to start saving for your child’s education.
Investment implies the making of new assets, plants, and equipment. It’s a process of investing money for profit or material result. The moneymaking might be faster than saving, but the risks are also higher. These are the reasons why you should invest:
- Starting a business
If you have a long time-frame to start-up a business, say 10-20 years, you should be investing to achieve the savings goal.
- Growing your money
Most types of investments, such as stocks and bonds, offer returns of money over a long period of time. This allows your money to create wealth; it allows you to earn a higher rate of return.
Insurance helps you protect yourself from risks like untimely death, house fires, health-related emergency situation, or burglary. Depending on your needs, you choose where you want to be protected against. These are the following types of insurance:
- Life Insurance
Having a life insurance ensures you to provide for those you left behind. This is one of the insurances you need to get if you have family members who depend on you for their expenses.
- Health Insurance
Health insurance is one of the most important types of insurance you will need. Your good health allows you to work, enjoy life, and earn money. A serious health illness will have a great impact on your finances, without being insured.
- Property Insurance
Property insurance is just as important as life insurance and health insurance. In the event of a fire or burglary, it protects you against liability and can cover the loss and damages.
When making financial decisions, correct information is needed in order to choose what is best for your finances. PhilLife is here to help you make an informed financial decision. To know more about PhilLife, visit their website at www.phillife.com.ph