ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Putting aside a sum of money in a systematic manner can help you steer out of many hurdles and obstacles in life. It can support you in your hour of need and ensure that your family has something to fall back on in case of an unfortunate event.

Detailed explanation-2: -Saving provides a financial “backstop” for life’s uncertainties and increases feelings of security and peace of mind. Once an adequate emergency fund is established, savings can also provide the “seed money” for higher-yielding investments such as stocks, bonds, and mutual funds.

Detailed explanation-3: -Key Takeaways. Because savings accounts pay interest while keeping your funds easily accessible, they’re a good option for emergency or short-term cash. In exchange for the ease and liquidity that savings accounts offer, you’ll earn a lower rate than that paid by more restrictive savings instruments and investments.

Detailed explanation-4: -First and foremost, saving money is important because it helps protect you in the event of a financial emergency. Additionally, saving money can help you pay for large purchases, avoid debt, reduce your financial stress, leave a financial legacy, and provide you with a greater sense of financial freedom.

Detailed explanation-5: -It helps in emergencies. Emergencies are always unexpected. Cushions against sudden job loss. You may have a good job now, but what if you were to lose that job? Helps finance those big-ticket items and major life events. Limits debt. Helps prepare for retirement.