The portion of our money that is not spent for consumption is called savings. Many of us value saving as a form of wealth and means to provide for our future. However, savings may not be entirely good depending on where the person puts his saving. If the person puts his saving in his piggy bank, he is the only one who benefits therefore the value of the money is not used productively. But if the saved money is placed on banks or invested to financial institution like SSS, Pag-ibig Fund, GSIS, insurance companies and the like, it will be beneficial to other people and the economy.
The money you placed in banks or financial institutions will either be used in productive field or provide loan money to people who need capital to start and expand their business or people in need of money for personal reasons. This is the reason why money deposited in the bank earns interest. Henceforth, your money increases and at the same time provides capital to enterprises essential to our economy.
But when is saving not well for economy? Since savings are sums of money not spent for goods and services due to various reasons, there will be lesser demand for goods and services resulting to lesser profits from these goods and service. Producers, who based their production to the demand of consumers, will then reduce production, thereby reducing employment and consumption or use of economic resources such as raw materials, manpower and other capital goods. This shows that savings somehow does not support the production process.
Therefore, savings will be more productive when used to provide funds for investment.
Saving, consumptions, productive and employment are interrelated. The producers always take into consideration the demand of the people. Thus, consumption feed production. When people prioritize savings over spending, the demands for or consumption of product drops. In such a situation producers will of course lessen production. Low production requires lesser workers, so prioritizing savings may lead you higher unemployment rate.
Savings are also affected by our income: the higher the income, the greater the chances to spend for goods and services while maintaining a healthy savings.
By: Charito M. Castañeda Master | Teacher 1 | Jose C. Payumo Jr. | Memorial High School | Naparing, Dinalupihan, Bataan
