Are Savings Better Than Loans?

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Keeping savings is a culture instilled in many straight from childhood. Many can attest to having a piggy bank account at home when they were kids where they would drop in coins to make savings. They could have been doing this to save money to buy something they had in mind or to collect money that would later be deposited in their bank accounts. This early training is in preparation for adulthood and the responsibilities it brings.481057423-481608

While many in their adult years try to save as much as they can, they still find themselves borrowing loans. This is because of the uncertainty that everyday life poses. Savings are best kept in a savings account. This helps keep the money away from the owner thus preventing one from using the funds for everyday temptations to acquire unnecessary things they may want.

Many savings accounts often come with restrictions as to when the money can be accessed and the limits the owner of the account can access. This usually poses a challenge when the account holder has an emergency need for funds. Even with savings, the inability to access the funds at a time when they are needed the most could send an individual with money into taking up a loan. There are few savings accounts which have flexible terms when it comes to access of the funds. Having these is advantageous as it becomes easier to access the funds in case of emergencies.

Using your savings in cases when you need money means that you will just have to replace the amount later by saving up more. However, taking up a loan means that you will have to pay back the money you took up along with interest. This makes loans expensive undertakings when compared to the use of your savings.

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